THE STATE BANK OF INDIA ACT, 1955 

ARRANGEMENT OF SECTIONS 

SECTIONS 

1.  Short title and commencement. 
2.  Definitions. 

CHAPTER I 

PRELIMINARY 

CHAPTER II 

INCORPORATION AND SHARE CAPITAL OF STATE BANK 

3.  Establishment of the State Bank. 
4.  Authorised capital. 
5.  Issued capital. 

CHAPTER III 

TRANSFER OF UNDERTAKING OF THE IMPERIAL BANK TO STATE BANK 

6.  Transfer of assets and liabilities of the Imperial Bank to the State Bank. 
7.  Transfer of service of existing officers and employees of the Imperial Bank to the State Bank. 
8.  Existing provident and other funds of the Imperial Bank. 
9.  Compensation to be given to shareholders of Imperial Bank. 

CHAPTER IV 

SHARES 

10.  Transferability of shares. 
10A. Right of registered shareholders to nominate. 
11.  Restrictions on voting rights. 
12.  Shares to be approved securities. 
13.  Register of shareholders. 
13A. Register of beneficial owners. 
14.  [Omitted.]. 
15.  Trusts not to be entered on the register of shareholders. 

CHAPTER V 
MANAGEMENT 

16.  Offices, branches and agencies. 
17.  Management. 
18.  Central Board to be guided by directions of Central Government. 
19.  Composition of the Central Board. 
19A. Qualifications for election of directors elected by shareholders. 
19B. Power of Reserve Bank to appoint additional directors. 
20.  Term of office of chairman, managing director, etc. 
21.  Local Boards. 
21A. Term of office of members of Local Board. 
21B. Powers of Local Board. 

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SECTIONS 

21C. Local Committees. 
22.  Disqualifications for directorship of Central Board or membership of Local Boards or 

Committees. 

23.  Vacation of office of directors, etc. 
24.  Removal from office of directors, etc. 
24A. Suppression of Central Board in certain cases. 
25.  Casual vacancies. 
26.  Remuneration of directors. 
27.  Powers and remuneration of chairman. 
28.  [Omitted.]. 
29.  Powers and remuneration of managing director. 
30.  Executive and other committees of the Central Board. 
31.  Meetings of the Central Board. 
31A. Meetings of Local Boards. 

CHAPTER VI 
BUSINESS OF THE STATE BANK 

32.  State Bank to act as agent of the Reserve Bank. 
33.  Other business which the State Bank may transact. 
34.  Business which the State Bank may not transact. 
35.  State Bank may acquire the business of other Banks. 
35A. Arrangement with the State Bank on appointment of directors to prevail. 

CHAPTER VII 
FUNDS, ACCOUNTS AND AUDIT 

36.  Integration and Development Fund. 
37.  Reserve Fund. 
38.  Disposal of profits. 
38A. Transfer of unpaid or unclaimed dividend. 
39.  Books to be balanced each year. 
40.  Returns. 
41.  Audit. 
42.  Balance sheet, etc., of State Bank may be discussed at general meeting. 

CHAPTER VIII 
MISCELLANEOUS 
43.  State Bank may appoint officers and other employees. 
43A. Bonus. 
44.  Obligation as to fidelity and secrecy. 
45.  Bar to liquidation of State Bank. 
46.  Indemnity of directors and members of Local Boards and Local Committees, etc. 
47.  Defects in appointment or constitution not to invalidate acts or proceedings. 
48.  [Omitted.]. 
49.  Power of Central Government to make rules. 
50.  Power of Central Board to make regulations. 
51. Requirements of foreign law to be complied with in certain cases. 
52. [Omitted.]. 
53. [Repealed.]. 
54. [Repealed.]. 
55.  No proceeding to lie in India against Imperial Bank after appointed day. 
56.  References to the Imperial Bank, the Bank of Bengal, etc., in other laws. 

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SECTIONS 

57.  Dissolution of Imperial Bank, etc. 

THE FIRST SCHEDULE. 

THE SECOND SCHEDULE. 

THE THIRD SCHEDULE.—[Repealed.] 

THE FOURTH SCHEDULE.—[Repealed.] 

THE FIFTH SCHEDULE.—[Repealed.] 

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THE STATE BANK OF INDIA ACT, 1955 

ACT NO. 23 OF 19551 

[8th May, 1955.] 

An Act to constitute a State Bank for India, to transfer to it the undertaking of the Imperial Bank 

of India and to provide for other matters connected therewith or incidental thereto. 

WHEAEAS for the extension of banking facilities on a large scale, more particularly in the rural and 
semi-urban areas, and for diverse other public purposes it is expedient to constitute a State Bank for India, 
and  to  transfer  to  it  the  undertaking  of  the  Imperial  Bank  of  India  and  to  provide  for  other  matters 
connected therewith or incidental thereto; 

BE it enacted by Parliament in the Sixth Year of the Republic of India as follows:— 

CHAPTER I 

PRELIMINARY 

1. Short title and commencement.—(1) This Act may be called the State Bank of India Act, 1955. 

(2) It shall come into force on such date2 as the Central Government may, by notification in the 

Official Gazette, appoint. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “appointed day” means the date on which this Act comes into force; 

(b) “Central Board” means the Central Board of Directors of the State Bank; 

3[(bb) “chairman” means the chairman of the Central Board;] 

(c) “goods” includes bullion, wares and merchandise; 

(d)  “Imperial Bank” means the Imperial Bank of India constituted under the Imperial Bank of 

India Act, 1920 (47 of 1920); 

3[(dd) “Local Board” means a Local Board constituted under section 21;] 

(e) “prescribed” means prescribed by regulations made under this Act; 

(f) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India 

Act, 1934 (2 of 1934); 

(g) “State Bank” means the State Bank of India constituted under this Act; 

4* 

5* 

* 

* 

* 

* 

* 

* 

* 

* 

6[(j) “workman” has the meaning assigned to it in the Industrial Disputes Act, 1947 (14 of 1947).] 

1.  The  Act  has  been  extended  to  Dadra  and  Nagar  Haveli  by  Reg.  6  of  1963,  s.  2  and  the  first  Schedule  (w.e.f.  1-7-1965); 
Pondicherry by Reg. 7 of 1963, s. 3 and first Schedule (w.e.f. 1-10-1963); and Goa, Daman and Diu by Reg. 11 of 1963, s. 3 
and Schedule (w.e.f. 1-2-1965). 

2.  1st July, 1955, vide notification No. S.R.O. 1077, dated 14th May, 1955, see Gazette of India, Part II, sec. 3(ii). 
3. Ins. by Act 35 of 1964, s. 2 (w.e.f. 1-12-1964). 
4. Clause (h) omitted by Act 19 of 2018, s. 3 (w.e.f. 1-4-2017). 
5. Omitted by Act 27 of 2010, s. 2 (w.e.f. 15-9-2010). 
6. Ins. by Act 48 of 1973, s. 2 (w.e.f. 1-7-1974). 

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CHAPTER II 

INCORPORATION AND SHARE CAPITAL OF STATE BANK 

3.  Establishment  of  the  State  Bank.—(1)  A  Bank  to  be  called  the  State  Bank  of  India  shall  be 
constituted to carry on the business of banking and other business in accordance with the provisions of 
this Act and for the purpose of taking over the undertaking of the Imperial Bank. 

(2) The  1[Central Government], together with such other persons as may from time to time become 
shareholders  in  the  State  Bank  in  accordance  with the  provisions of this  Act,  shall,  so long  as  they  are 
shareholders in the State Bank, constitute a body corporate with perpetual succession and a common seal 
under the name of the State Bank of India, and shall sue and be sued in that name. 

(3) The State Bank shall have power to acquire and hold property, whether movable or immovable, 

for the purposes for which it is constituted and to dispose of the same. 

2[4.  Authorised  capital.—Subject  to  the  provisions  of  this  Act,  the  authorised  capital  of  the  State 
Bank shall be five thousand crores of rupees divided into five hundred crores of fully paid-up shares often 
rupees each: 

Provided that the Central Board may reduce the nominal or face value of the shares, and divide the 

authorised capital into such denomination as it may decide with the approval of the Reserve Bank: 

Provided further that the Central Government may, in consultation with the Reserve Bank, increase or 

reduce the authorised capital so however that the shares in all cases shall be fully paid-up shares.] 

5.  Issued  capital.—(1)  The  issued  capital  of  the  State  Bank  shall,  on  the  appointed  day,  be  five 
crores,  sixty-two  lakhs  and  fifty  thousand  rupees  divided  into  five  lakhs,  sixty-two  thousand  and  five 
hundred shares, all of which shall, on the appointed day, stand allotted to the Reserve Bank in lieu of the 
shares of the Imperial Bank 3[transferred to and vested in it under section 6]. 

4[(2)  The  issued  capital  of  the  State  Bank  shall  consist  of  equity  shares  or  equity  and  preference 

shares: 

Provided that the issue of preference shares shall be in accordance with the guidelines framed by the 
Reserve  Bank  specifying  the  class  of  preference  shares,  the  extent  of  issue  of  each  class  of  such 
preference shares (whether perpetual or irredeemable or redeemable) and the terms and conditions subject 
to which, each class of preference shares may be issued: 

Provided further that the Central Board may from time to time increase, with the previous approval of 
the  Reserve  Bank  and  the  Central  Government,  whether  by  public  issue  or  rights  issue  or  preferential 
allotment or private placement, in accordance with the procedure as may be prescribed, the issued capital 
by the issue of equity or preference shares: 

Provided also that the Central Government shall, at all times, hold not less than fifty-one per cent. of 

the issued capital consisting of equity shares of the State Bank.] 

(3)  No  increase  in  the  issued  capital  beyond  twelve  crores  and  fifty  lakhs  of  rupees  shall  be  made 

under sub-section (2) without the previous sanction of the Central Government. 

5[(4) Subject to the provisions contained in sub-section (2), the Central Board may increase from time 
to time, by way of issuing bonus shares to existing equity shareholders, the issued capital in such manner 
as the Central Government may, after consultation with the Reserve Bank, direct. 

(5) The State Bank may, accept the money in respect of shares issued towards increase in the issued 
capital  in  instalments,  make  calls,  forfeit  unpaid  shares  and  re-issue  them,  in  such  manner  as  may  be 
prescribed.] 

1. Subs. by Act 32 of 2007, s. 2, for “Reserve Bank” (w.e.f. 29-6-2007). 
2. Subs. by Act 27 of 2010, s. 3, for section 4 (w.e.f. 15-9-2010). 
3. Subs. by Act 33 of 1955, s. 2, for “transferred to it by paragraph 2 of the First Schedule” (w.e.f. 21-9-1955) 
4. Subs. by Act 27 of 2010, s. 4, for sub-section (2) (w.e.f. 15-9-2010). 
5. Ins. by s. 4, ibid. (w.e.f. 15-9-2010). 

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TRANSFER OF UNDERTAKING OF THE IMPERIAL BANK TO STATE BANK 

CHAPTER III 

6. Transfer of assets and liabilities of the Imperial Bank to the State Bank.—(1) Subject to the 

other provisions contained in this Act, on the appointed day, 

(a)  all  shares  in  the  capital  of  the  Imperial  Bank  shall  be  transferred  to,  and  shall  vest  in,  the 

Reserve Bank, free of all trusts, liabilities and encumbrances, and 

(b) the undertaking of the Imperial Bank shall be transferred to, and shall vest in, the State Bank. 

(2) The  undertaking  of  the  Imperial  Bank  shall  be  deemed  to  include all rights,  powers,  authorities 
and  privileges,  and  all  property,  movable  and  immovable,  including  cash  balances,  reserve  funds, 
investments  and  all  other  interests  and  rights  in,  or  arising  out  of,  such  property  as  may  be  in  the 
possession  of  that  bank  immediately  before  the  appointed day,  and  all  books,  accounts, and  documents 
relating thereto, and shall also be deemed to include all debts, liabilities and obligations of whatever kind 
then existing of that bank. 

1  [(3)  Unless  otherwise  expressly  provided  by  or  under  this  Act,  all  contracts,  deeds,  bonds, 
agreements, powers of attorney, grants of legal representation and other instruments of whatever nature 
subsisting  or  having  effect  immediately  before  the  appointed  day  and  to  which  the  Imperial  Bank  is  a 
party or which are in favour of the Imperial Bank shall be of as full force and effect against or in favour of 
the  State  Bank,  as  the  case  may  be,  and  may  be  enforced  or  acted  upon  as  fully  and  effectually  as  if 
instead  of  the  Imperial  Bank  the  State  Bank  had  been  a  party  thereto  or  as  if  they  had  been  issued  in 
favour of the State Bank]. 

(4) If on the appointed day any suit, appeal or other legal proceeding of whatever nature, is pending 
by or against the Imperial Bank, the same shall not abate, be discontinued or be in any way prejudicially 
affected by reason of the transfer to the State Bank of the undertaking of the Imperial Bank or of anything 
contained in this Act, but the suit, appeal or other proceeding may be continued, prosecuted and enforced 
by or against the State Bank. 

7.  Transfer  of  service  of  existing  officers  and  employees  of  the  Imperial  Bank  to  the  State 
Bank.—(1) Every officer or other employee of the Imperial Bank (excepting the managing director, the 
deputy  managing  director  and  other  directors)  in  the  employment  of  the  Imperial  Bank  immediately 
before the appointed day shall, on and from the appointed day, become an officer or other employee, as 
the case may be, of the State Bank, and shall hold his office or service therein by the same tenure, at the 
same remuneration and upon the same terms and conditions and with the same rights and privileges as to 
pension,  gratuity  and  other  matters  as  he  would  have  held  the  same  on  the  appointed  day  if  the 
undertaking of the Imperial Bank had not vested in the State Bank, and shall continue to do so unless and 
until his  employment  in the  State  Bank  is terminated  or  until  his remuneration,  terms  or conditions  are 
duly altered by the State Bank. 

(2)  Any  person  who,  on  the  appointed  day,  is  entitled  to  or  is  in  receipt  of,  a  pension  or  other 
superannuation or compassionate allowance or benefit from the Imperial Bank or any provident, pension 
or other fund or any authority administering such fund shall be entitled to be paid by, and to receive from, 
the State Bank or any provident, pension or other fund or any authority administering such fund the same 
pension, allowance or benefit so long as he observes the conditions on which the pension, allowance or 
benefit was granted, and if any question arises whether he has so observed such conditions, the question 
shall be determined by the Central Government and the decision of the Central Government thereon shall 
be final. 

(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), no appointment made or 
promotion, increment in salary, pension, allowance or any other benefit granted to any person after the 
19th day of December, 1954, and before the appointed day which would not ordinarily have been made or 
granted  or  which  would  not  ordinarily  have  been  admissible  under  the  rules  or  authorisations  of  the 
Imperial Bank or of any provident, pension or other fund in force prior to the 19th day of December, 

1. Subs. by Act 33 of 1955, s. 3, for sub-section (3) (w.e.f. 21-9-1955). 

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1954, shall have effect or be payable or claimable from the State Bank or from any provident, pension or 
other fund or from any authority administering the fund, unless the Central Government has, by general or 
special order, confirmed the appointment, promotion or increment or has directed the continued grant of 
the pension allowance or other benefit as the case may be. 

(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any 
other law for the time being in force, the transfer of the services of any officer or other employes of the 
Imperial Bank from that Bank to the State Bank shall not entitle such officer or other employees to any 
compensation under that Act or other law, and no such claim shall be entertained by any Court, Tribunal 
or other authority. 

(5) Any person holding office as managing director, deputy managing director, director or member of 
any  Local  Board  of  the  Imperial  Bank  immediately  before  the  appointed  day  shall  be  deemed  to  have 
vacated his office as such on the appointed day, and notwithstanding anything contained in this Act or in 
any other law for the time being in force or in any agreement or contract, he shall not be entitled to any 
compensation  from  the  Imperial  Bank  or  the  State  Bank  for  the  loss  of  office  or  for  the  premature 
termination of any agreement or contract relating to his employment, except such pension, compensation 
or other benefit which the State Bank may  grant to  him, having regard to what that person would have 
received as an officer of the Imperial Bank if this Act had not been passed and if he had retired from his 
employment in the ordinary course. 

(6) Where  any  managing  director,  deputy  managing  director,  director,  officer  or  other  employee  of 
the Imperial Bank has, after the 19th day of December, 1954, and before the appointed day, been paid any 
sum by way of compensation or gratuity, the State Bank shall be entitled to claim refund of  any sum so 
paid if the payment is not confirmed by the Central Government by general or special order. 

8. Existing provident and other funds of the Imperial Bank.—For the persons who immediately 

before the appointed day are the trustees of the following funds, that is to say,— 

(a) the Imperial Bank of India Employees Provident Fund; 

(b) the Imperial Bank of India Employees Pension and Guarantee Fund; 

(c) the Bank of Bombay Officers Pension and Guarantee Fund; 

(d) the Bank of Madras Pension and Gratuity Fund; and 

(e) the Bank of Madras Officers Provident and Mutual Guarantee Fund; 

there shall be substituted as trustees such persons as the Central Government may, by general or special 
order, specify. 

9.  Compensation  to  be  given  to  shareholders  of  Imperial  Bank.—(1)  Every  person  who 
immediately  before  the  appointed  day  is  registered  as  a  holder  of  shares  in  the  Imperial  Bank  shall  be 
entitled to compensation in accordance with the provisions contained in the First Schedule. 

(2)  Nothing  contained  in  sub-section  (1)  shall  affect  the  rights  inter  se  between  the  holder  of  any 
share in the Imperial Bank and any other person who may have an interest in such share, and such other 
person  shall  be  entitled  to  enforce  his  interest  against  the  compensation  awarded  to  the  holder  of  such 
share, but not against the Reserve Bank. 

CHAPTER IV 

SHARES 

10. Transferability of shares.—(1) Save as otherwise provided in sub-section (2), the shares of the 

State Bank shall be freely transferable. 

(2) Nothing contained in sub-section (1) shall entitle the 1[Central Government] to transfer any shares 
held by it in the State Bank if such transfer will result in reducing the shares held by it to less than 2[fifty- 

1. Subs. by Act 32 of 2007, s. 4, for “Reserve Bank” (w.e.f. 29-6-2007). 
2. Subs. by 27 of 2010, s. 5, for “fifty-five per cent. of the issued capital” (w.e.f. 15-9-2010). 

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one per cent. of the issued capital consisting of equity shares,] of the State Bank. 
1[10A. Right of registered shareholders to nominate.—(1) Every individual registered shareholder 
may, at any time, nominate, in the prescribed manner, an individual to whom all his rights in the shares 
shall vest in the event of his death. 

(2) Where the shares are registered in the name of more than one individual jointly, the joint holders 
may together nominate in the prescribed manner, an individual to whom all their rights in the shares shall 
vest in the event of the death of all the joint holders. 

(3)  Notwithstanding  anything  contained  in  any  other  law  for  the  time  being  in  force  or  in  any 
disposition,  whether testamentary  or  otherwise,  where  a  nomination in  respect  of  shares is  made  in the 
prescribed manner and which purports to confer on the nominee the right to vest the shares, the nominee 
shall, on the death of the shareholder or, as the case may be, on the death of all the joint holders, become 
entitled to all the rights of the shareholder or, as the case may be, of all the joint holders, in relation to 
such  shares  and  all  other  persons  shall  be  excluded  unless  the  nomination  is  varied  or  cancelled  in  the 
prescribed manner. 

(4) Where the nominee is a minor, it shall be lawful for the individual registered holder of the shares 
to make nomination to appoint, in the prescribed manner, any person to become entitled to the shares in 
the event of his death during the minority of the nominee.] 

2[11. Restrictions on voting rights.—No shareholder, other than the 3[Central Government], shall be 
entitled  to  exercise  voting  rights  in  respect  of  any  shares  held  by  him  in  excess  of  ten  per  cent.  of  the 
issued capital: 

Provided that such shareholder shall be entitled to exercise voting rights at such higher percentage as 

the Central Government may, after consultation with the 3[Central Government], specify.] 

4[Provided further that the shareholder holding any preference share capital in the State Bank shall, in 
respect  of  such  capital,  have  a  right  to  vote  only  on  resolutions  placed  before  the  State  Bank  which 
directly affect the rights attached to his preference shares: 

Provided also that no preference shareholder, other than the Central Government, shall be entitled to 
exercise voting rights in respect of preference shares held by him in excess of ten per cent, of total voting 
rights of all the shareholders holding preference share capital only.] 

12. Shares to be approved securities.—Notwithstanding anything contained in the Acts hereinafter 
mentioned  in  this  section,  the  shares  of  the  State  Bank  shall  be  deemed  to  be  included  among  the 
securities enumerated in section 20 of the Indian Trusts Act, 1882 (2 of 1882), and also to be approved 
securities  for  the  purposes  of  the  Insurance  Act,  1938  (4  of  1938),  and  the  5[Banking  Regulations  Act, 
1949 (10 of 1949)]. 

6[13.  Register  of  shareholders.—(1) The  State  Bank  shall  keep  at  its  Central Office,  a register,  in 
one or more books of the shareholders, and shall enter therein the following particulars so far as they may 
be available:— 

(i) the names, addresses and occupations, if any, of the shareholders and a statement of the shares 

held by each shareholder, distinguishing each share by its denoting number; 

(ii) the date on which each person is so entered as a shareholder; 

(iii) the date on which any person ceases to be a shareholder; and 

(iv) such other particulars as may be prescribed. 

7[Provided that nothing in this sub-section shall apply to the shares held with a depository.] 

1. Ins. by Act 27 of 2010, s. 6 (w.e.f. 15-9-2010). 
2. Subs. by Act 3 of 1994, s. 3, for section 11 (15-10-1993). 
3. Subs. by Act 32 of 2007, s. 5, for “Reserve Bank” (w.e.f. 29-6-2007). 
4. Ins. by Act 27 of 2010, s. 7 (w.e.f. 15-9-2010). 
5. Subs. by Act 3 of 1994, s. 4, for “Banking Companies, 1949” (w.e.f. 15-10-1993). 
6. Subs. by s. 13, ibid., for section 13 (w.e.f. 15-10-1993). 
7. Ins. by Act 8 of 1997, s. 3 (w.e.f. 15-1-1997). 

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(2)  Notwithstanding  anything  contained  in  sub-section  (1),  it  shall  be  lawful  for  the  State  Bank  to 
keep the register of shareholders 1[in computer floppies or diskettes or any other electronic form] subject 
to such safeguards as may be prescribed. 

(3) Notwithstanding anything contained in the Indian Evidence Act, 1872 (1 of 1872), a copy of, or 
extract from, the register of shareholders, certified to be a true copy under the hand of an officer of the 
State Bank authorised in this behalf, shall, in all legal proceedings, be admissible in evidence.] 

2[13A. Register of beneficial owners.—The register of beneficial owners maintained by a depository 
under  section  11  of  the  Depositories  Act,  1996  (22  of  1996),  shall  be  deemed  to  be  a  register  of 
shareholders for the purposes of this Act.] 

14.  [Branch registers.]Omitted  by the  State  Bank  of  India  (Amendment)  Act,  1993  (3  of 1994),  s. 6 

(w.e.f. 15-10-1993). 

3[15.  Trusts  not to  be  entered  on  the  register  of  shareholders.—No  notice of  any  trust,  express, 
implied  or  constructive,  shall  be  entered  on  the  register  of  shareholders  or  be  receivable  by  the  State 
Bank.] 

4[Provided that nothing in this section shall apply to a depository in respect of shares held by it as a 

registered owner on behalf of the beneficial owners. 

Explanation.—For  the  purposes  of  section  13,  section  13A  and  this  section,  the  expressions 
“beneficial owner”, “depository” and “registered owner” shall have the meanings respectively assigned to 
them in clauses (a), (e) and (j) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996).] 

CHAPTER V 

MANAGEMENT 

16. Offices, branches and agencies.—(1) Unless otherwise provided by the Central Government, by 
notification in the Official Gazette, the Central Office of the State Bank shall be at  5[Mumbai, and shall 
also be known as Corporate Centre]. 

(2) The State Bank shall have local head offices in 6[Mumbai, Kolkata and Chennai] and at such other 

places in India as the Central Government, in consultation with the Central Board, may determine. 

(3) The State Bank shall maintain as its branches or agencies, all branches or agencies of the Imperial 
Bank which were in existence 7[in India] immediately before the appointed day, and no such branch may 
be closed without the previous approval of the Reserve Bank. 

(4) The State Bank may establish branches or agencies at any place in or outside India in addition to 

the branches or agencies referred to in sub-section (3). 

(5) Notwithstanding anything contained in sub-section (4), the State Bank shall establish not less than 
four hundred branches in addition to the branches referred to in sub-section (3) within five years of the 
appointed  day  or  such  extended  period  as  the  Central  Government  may  specify  in  this  behalf,  and  the 
places where such additional branches are to be established shall be determined in accordance with any 
such programme as may be drawn up by the Central Government from time to time in consultation with 
the Reserve Bank and the State Bank, and no branch so established shall be closed without the previous 
approval of the Reserve Bank. 

17. Management.—(1) The general superintendence and direction of the affairs and business of the 
State Bank shall be entrusted to the Central Board which may exercise all powers and do all such acts and 
things  as  may  be  exercised  or  done  by  the  State  Bank  and  are  not  by  this  Act  expressly  directed  or 
required to be done by the State Bank in general meeting. 

1. Subs. by Act 27 of 2010, s. 8, for “in computer floppies or diskettes” (w.e.f. 15-9-2010). 
2. Ins. by Act 8 of 1997, s. 4 (w.e.f. 15-1-1997). 
3. Subs. by Act 3 of 1993, s. 7, for section 15 (w.e.f. 15-10-1993). 
4. The proviso and Explanation ins. by Act 8 of 1997, s. 5 (w.e.f. 15-1-1997). 
5. Subs. by Act 27 of 2010, s. 9, for “Bombay” (w.e.f. 15-9-2010). 
6. Subs. by s. 9, ibid., for “Bombay, Calcutta and Madras” (w.e.f. 15-9-2010). 
7. Ins. by Act 33 of 1955, s. 4 (w.e.f. 21-9-1955). 

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(2) The Central Board in discharging its functions shall act on business principles, regard being had to 

public interest. 

18. Central Board to be guided by directions of Central Government.—(1) In the discharge of its 
functions  1***  the  State  Bank  shall  be  guided  by  such  directions  in  matters  of  policy  involving  public 
interest as the Central Government may, in consultation with the Governor of the Reserve Bank and the 
chairman of the State Bank, give to it. 

(2)  2[All directions shall be given by the Central Government] and, if any question arises whether a 
direction relates to a matter of policy involving public interest, the decision of the  Central Government 
thereon shall be final. 

19.  Composition  of  the  Central  Board.—3***  The  Central  Board  shall  consist  of  the  following, 

namely: 

(a) a chairman 4*** to be appointed by the Central Government in consultation with the Reserve 

Bank 5***. 

6[(b) such number of managing directors not exceeding four, as may be appointed by the Central 

Government in consultation with the Reserve Bank;] 

7* 

* 

* 

* 

* 

(c) if the total amount of the holdings of the shareholders, other than the  8[Central Government], 
whose names are on the 9[register of shareholders] three months before the date fixed for election of 
directors is— 

(i) not more than ten per cent. of the total issued capital, two directors, 

(ii)  more than ten per cent. but not more than twenty-five per cent. of such capital three 

directors, and 

(iii)  more than twenty-five per cent. of such capital, four directors, to be elected in the 

prescribed manner by such shareholders; 
10[(ca)  one  director,  from  among  the  employees  of  the  State  Bank,  who  are  workmen,  to  be 

appointed by the Central Government in the manner provided in the rules made under this Act; 

(cb) one director, from among such of the employees of the State Bank, as are not workmen, to be 

appointed by the Central Government in the manner provided in the rules made under this Act]; 

(d)  not  less  than  two  and  not  more  than  six  directors  to  be  nominated  by  the  Central  
Government  11***,  from  among  persons  having  special  knowledge  of  the  working  of  co-operative 
institutions and of rural economy or experience in commerce, industry, banking or finance;] 

(e) one director to be nominated by the Central Government; and 
12[(f) one director, possessing necessary expertise and experience in matters relating to regulation 
or  supervision  of  commercial  banks  to  be  nominated  by  the  Central  Government  on  the 
recommendation of the Reserve Bank.] 

1. The words “including those relating to a subsidiary bank” omitted by Act 19 of 2018, s. 4 (w.e.f. 1-4-2017). 
2. Subs. by Act 32 of 2007, s. 6, for “All directions given by the Central Government shall be given through the Reserve Bank” 

(w.e.f. 29-6-2007). 

3. The brackets and figure “(1)” omitted by Act 3 of 1994, s. 8 (w.e.f. 15-10-1993). 
4. Certain words omitted by Act 73 of 1976, s. 4 (w.e.f. 11-6-1976). 
5. The words “and a vice-chairman” omitted by Act 27 of 2010, s. 10 (w.e.f. 15-9-2010). 
6. Subs. by s. 10, ibid., for clause (b) (w.e.f. 15-9-2010). 
7. Omitted by s. 10, ibid. (w.e.f. 15-9-2010). 
8. Subs. by Act 32 of 2007, s. 7, for “Reserve Bank” (w.e.f. 29-6-2007). 
9. Subs. by Act 3 of 1994, s. 8, for “Principal register” (w.e.f. 15-10-1993). 
10. Ins. by Act 48 of 1973, s. 3 (w.e.f. 1-7-1974). 
11. The words “in consultation with the Reserve Bank” omitted by Act 27 of 2010, s. 10 (w.e.f. 15-9-2010). 
12. Subs. by s. 10, ibid., for clause (f) (w.e.f. 15-9-2010). 

10 

 
 
 
 
1* 
2[19A. Qualifications for election of directors elected by shareholders.—(1) The directors elected 

* 

* 

* 

* 

under clause (c) of section 19 shall— 

(a)  have special knowledge or experience in respect of one or more of the following areas, 

namely:— 

(i) agriculture and rural economy, 

(ii) banking, 

(iii) co-operation, 

(iv) economics, 

(v) finance, 

(vi) law, 

(vii) small-scale industry, 

(viii) any other area the special knowledge of, and experience in, which in the opinion of the 

Reserve Bank shall be useful to the State Bank; 

(b) represent the interests of depositors; or 

(c) represent the interests of farmers, workers and artisans. 

(2)  Without  prejudice  to  the  provisions  of  sub-section  (1)  and  notwithstanding  anything  to  the 
contrary contained in this Act or in any other law for the time being in force, no person shall be eligible to 
be  elected  as  director  under  clause  (c)  of  section  19  unless  he  is  a  person  having  fit  and  proper  status 
based upon track record, integrity and such other criteria as the Reserve Bank may notify from time to 
time in this regard and the Reserve Bank may specify in the notification issued under this sub-section, the 
authority  to  determine  the  fit  and  proper  status,  the  manner  of  such  determination,  the  procedure  to  be 
followed  for  such  determinations  and  such  other  matters  as  may  be  considered  necessary  or  incidental 
thereto. 

(3) Where the Reserve Bank is of the opinion that any director of the State Bank elected under clause 
(c) of section 19 does not fulfil the requirements of sub-sections (1) and (2), it may, after giving to such 
director and the State Bank a reasonable opportunity of being heard, by order, remove such director. 

(4)  On  the  removal  of  a  director  under  sub-section  (3),  the  Central  Board  shall  co-opt  any  other 
person  fulfilling  the  requirements  of  sub-sections  (1)  and  (2),  as  a  director  in  place  of  the  person  so 
removed, till a director is duly elected by the shareholders of the State Bank in the next annual general 
meeting; and the person so co-opted shall be deemed to have been duly elected by the shareholders of the 
State Bank as a director. 

19B. Power of Reserve Bank to appoint additional directors.—(1) If the Reserve Bank is of the 
opinion that in the interest of banking policy or in the public interest or in the interests of the State Bank 
or its depositors, it is necessary so to do, it may, from time to time and by order in writing appoint, with 
effect from such date as may be specified in the order, one or more persons as additional directors of the 
State Bank. 

(2) Any person appointed as additional director under sub-section (1) shall,— 

(a)  hold  office  during  the  pleasure  of  the  Reserve  Bank  and  subject  thereto  for  a  period  not 
exceeding three years or such further periods not exceeding three years at a time as the Reserve Bank 
may, by order, specify; 

1. Sub-section (2) and (3) omitted by Act 35 of 1964, s. 3 (w.e.f. 1-12-1964). 
2. Ins. by Act 27 of 2010, s. 11 (w.e.f. 15-9-2010). 

11 

 
 
 
 
 
 
(b) not incur any obligation or liability by reason only of his being an additional director or for 
anything done or omitted to be done in good faith in the execution of the duties of his office or in 
relation thereto; and 

(c) not be required to hold qualification shares in the State Bank. 

(3) For the purpose of reckoning any proportion of the total number of directors of the State Bank any 

additional director appointed under this section shall not be taken into account.] 

20.  Term  of  office  of  chairman,  managing  director,  etc.—(1)  1[The  chairman,  2***  and  each 
managing director] shall hold office for such term not exceeding five years, as the Central Government 
may fix when appointing them and shall be eligible for reappointment. 

3[(1A) Notwithstanding anything contained in sub-section (1), the Central Government shall have the 
right to terminate the terms of office of the chairman, 2*** or a managing director, as the case may be, at 
any time before the expiry of the term fixed under sub-section (1) by giving him notice of not less than 
three months in writing or three months’ salary and allowances in lieu of such notice; and the chairman, 
2*** or a managing director, as the case may be, shall also have the right to relinquish his office at any 
time before the expiry of the term so fixed by giving to the Central Government notice of not less than 
three months in writing.] 

4* 

* 

* 

* 

* 

(3) Subject to the provisions contained in section 19 and 5*** a director elected under clause (c) 6*** 
of  7  [that  section]  shall  hold  office  for  8  [three  years]  and  9  ***  10  ***  and  shall  be  eligible    for    re-  
election 11***: 

12[Provided that no such director shall hold office continuously for a period exceeding six years.] 
13[(3A)  14[subject  to  the  provisions  contained  in  sub-section  (4),  a  director]  appointed  under  clause 
(ca) or clause (cb) 15[of section 19 or nominated under clause (d) of that section] shall hold office for such 
term, not exceeding three years, as the Central Government may specify  16*** and shall be eligible 17[for 
re appointment or re-nomination, as the case may be:]] 

12[Provided that no such director shall hold office continuously for a period exceeding six years.] 
18[(4) A director appointed under clause (ca) or clause (cb) 19[of section 19 or nominated under clause 
(d)  or  clause  (e)  or  clause  (f)  of  that  section]  shall  hold  office  during  the  pleasure  of  the  authority 
appointing or nominating him, as the case may be.] 

1. Subs. by Act 73 of 1976, s. 4, for “The chairman and the vice-chairman” (w.e.f. 11-6-1976). 
2. The words “, vice-chairman” omitted by Act 27 of 2010, s. 12 (w.e.f. 15-6-2010). 
3. Ins. by Act 73 of 1976, s. 4 (w.e.f. 11-6-1976). 
4. Omitted by s. 4, ibid. (w.e.f. 11-6-1976). 
5. The words, brackets and figures “and in sub-section (5)” omitted by Act 66 of 1988, s.12 (w.e.f. 8-7-1992). 
6. The words, brackets and figures “of sub-section (1)” omitted by Act 3 of 1994, s. 9 (w.e.f. 15-10-1993). 
7. Subs. by Act 66 of 1988, s. 12, for certain words (w.e.f. 8-7-1992). 
8. Subs. by s. 12, ibid., for “four years” (w.e.f. 8-7-1992). 
9.  The words  “and  thereafter  until  his  successor  shall  have  been  duly  elected”  omitted  by  Act  45  of  2006,  s.  14  

(w.e.f. 16-10-2006). 

10. The words “or nominated” omitted by Act 66 of 1988, s. 12 (w.e.f. 8-7-1992). 
11. The words “or re nomination” omitted by s. 12, ibid. (w.e.f. 8-7-1992). 
12. Ins. by s. 12, ibid. (w.e.f. 8-7-1992). 
13. Ins. by Act 48 of 1973, s. 4 (w.e.f. 1-7-1974). 
14. Subs. by Act 66 of 1988, s. 12, for “A director” (w.e.f. 8-7-1992). 
15. Subs. by Act 3 of 1994, s. 9, for certain words (w.e.f. 15-10-1993). 
16. The words “and thereafter until his successor shall have been duly appointed or nominated” omitted by Act 27 of 2010, s. 12 

(w.e.f. 15-9-2010). 

17. Subs. by Act 66 of 1988, s. 12, for certain words (w.e.f. 8-7-1992). 
18. Subs. by s. 12, ibid., for sub-section (4) (w.e.f. 8-7-1992). 
19. Subs. by Act 3 of 1994, s. 9, for certain words (w.e.f. 15-10-1993). 

12 

 
 
 
 
 
 
1* 
2[21. Local Boards.—(1) There shall be constituted at each place where the State Bank has a local 

* 

* 

* 

* 

head office, a Local Board which shall consist of the following members, namely:— 

3[(a) the chairman, ex officio or the managing director nominated by the chairman;] 
4[(b) all such directors elected or nominated to the Central Board under clause (c) or clause (d) of 
section 19 as are ordinarily resident in the area falling within the jurisdiction of the local head office;] 

* 

* 

(c) six members to be nominated by the Central Government 5***; 
6* 
* 
(e) 7[the Chief General Manager] of the local head office, appointed by the State Bank, ex officio. 
8[(2) Where as a result of the establishment of any local head office (hereinafter referred to as the new 
local head office) for any area which is already falling within the jurisdiction of another local head office 
(hereinafter referred to as the existing local head office) a Local Board (hereinafter referred to as the new 
Local  Board)  is  constituted  for  the  new  local  head  office,  any  person  who  is,  at  the  time  of  such 
Constitution, holding office as a member of a Local Board (hereinafter referred to as the existing Local 
Board) for an existing local head office under clause (c) of sub-section (1) and is ordinarily resident in the 
area falling within the jurisdiction of the new local head office, shall cease to hold office as member of 
the existing Local Board and shall become a member of the new Local Board and shall on becoming such 
member be deemed to have been nominated to the new Local Board and shall hold office as such member 
for the unexpired portion of his term of office as a member of the existing Local Board.] 

* 

(3) Any vacancy caused in the existing Local Board as a result of any member thereof becoming a 
member  of  the  new  Local  Board  under  sub-section  (2)  shall  be  deemed  to  be  a  casual  vacancy  and  be 
filled in accordance with the provisions of section 25. 

9* 
10[(5) The 11[Central Government] shall, in consultation with the chairman, appoint— 

* 

* 

* 

* 

(a) a member of a Local Board nominated under clause (c) of sub-section (1) to be the president 

thereof; and 

(b) a member of a Local Board holding office under clause (b) or nominated under clause (c) of 

that sub-section to be the vice-president thereof.] 
12[21A. Term of office of members of Local Board.—13[(1) Subject to the provisions contained in 

this section and in sub-section (2) of section 21, a member of a Local Board— 

(a) nominated under clause (c) of sub-section (1) of section 21 shall hold office for such term, not 

exceeding three years, as the Central Government may specify in this behalf 14***; 

1. Omitted by Act 66 of 1988, s. 12 (w.e.f. 8-7-1992). 
2. Subs. by Act 35 of 1964, s. 5, for section 21 (w.e.f. 1-12-1974). 
3. Subs. by Act 27 of 2010, s. 13, for clause (a) (w.e.f. 15-9-2010). 
4. Subs. by Act 3 of 1994, s. 10, for clause (b) (w.e.f. 15-10-1993). 
5. The words “in consultation with the Reserve Bank” omitted by Act 27 of 2010, s. 13 (w.e.f. 15-9-2010). 
6. Omitted by Act 3 of 1994, s. 10(w.e.f. 15-10-1993). 
7. Subs. by Act 48 of 1973, s. 5, for “the Secretary and Treasurer” (w.e.f. 1-7-1974). 
8. Subs. by Act 3 of 1994, s. 10, for sub-section (2) (w.e.f. 15-10-1993). 
9. Omitted by s. 10, ibid. (w.e.f. 15-10-1993). 
10. Subs. by s. 10, ibid., for sub-section (5) (w.e.f. 15-10-1993). 
11. Subs. by Act 27of 2010, s. 13, for “Governor of the Reserve Bank” (w.e.f. 15-9-2010). 
12. Ins. by Act 35 of 1964, s. 6 (w.e.f. 1-12-1964). 
13. Subs. by Act 66 of 1988, s. 13, for sub-section (1) (w.e.f. 15-10-1993). 
14. The words “and thereafter until his successor has been duly nominated” omitted by Act 45 of 2006, s. 15 (w.e.f. 16-10-2006). 

13 

 
 
 
 
 
 
 
(b) elected under clause (d) of sub-section (1) of section 21 shall hold office for three years and 

1***, 

and shall be eligible for re-nomination or re-election, as the case may be: 

Provided that no such director shall hold office continuously for a period exceeding six years.] 
2* 

* 

* 

* 

* 

(3) A director of the Central Board becoming a member of a Local Board by virtue of the provisions 
of clause (b) of sub-section (1) of section 21 shall cease to hold office as such member on his ceasing to 
be a director or on his ceasing to be ordinarily resident in the relevant area. 

(4) The president and the vice-president of a Local Board shall each hold office for two years or the 
remaining period of his office as a member of the Local Board, whichever is shorter, and shall be eligible 
for re-appointment so long as he is a member of the Local Board. 

3[(5) A member of a Local  Board nominated under clause (c) of sub-section (1) of section 21 shall 

hold office during the pleasure of the Central Government.] 

4[21B.  Powers  of  Local  Board.—In  respect  of  the  area  falling  within  the  jurisdiction  of  the  local 
head office for which the Local Board has been constituted, a Local Board shall, subject to such general 
or special direction as the Central Board may give from time to time, exercise such powers and perform 
such duties and functions as may be entrusted or delegated to it by the Central Board.] 

21C. Local Committees.—5[(1) A Local Committee may be constituted by the Central Board for any 

area and shall consist of such number of members as may be prescribed. 

6[(2) The chairman or the managing director nominated by him shall be an ex officio member of every 

such Local Committee.] 

(3)  A  Local  Committee  shall  exercise  such  powers  and  perform  such  functions  and  duties  as  the 

Central Board may confer on or assign to it.] 

22.  Disqualifications  for  directorship  of  Central  Board  or  membership  of  Local  Boards  or 
Committees.—(1) No person shall be qualified to be a director of the Central Board or a member of a 
Local Board or of a Local Committee if— 

(a)  he holds the office of director, provisional director, promoter, agent or manager of any 

banking company already established or advertised as about to be established; or 

(b) he is a salaried officer of Government not specially authorised by the Central Government to 

be a director or member; or 

(c) he has been removed or dismissed from the service of Government on a charge of corruption 

or bribery; or 

(d)  he  holds  any  office  of  profit  under  the  State  Bank  other  than  the  office  of   

chairman, 7*** 8[managing director] or 9[ 10[Chief General Manager or legal or technical adviser]]; or 

1. The words “and thereafter until his successor has been duly nominated” omitted by Act 45 of 2006, s. 15 (w.e.f. 16-10-2006). 
2. Omitted by Act 3 of 1994, s. 11 (w.e.f. 15-10-1993). 
3. Ins. by Act 66 of 1988, s. 13 (w.e.f. 8-7-1992). 
4. Subs. by Act 27 of 2010, s. 14, for section 21B (w.e.f. 15-9-2010). 
5. Ins. by Act 35 of 1964, s.6 (w.e.f. 1-12-1964). 
6. Subs. by Act 27 of 2010, s. 15, for sub-section (2) (w.e.f. 15-9-2010). 
7. The word “vice-chairman” omitted by s. 16, ibid. (w.e.f 15-9-2010). 
8. Subs. by Act 26 of 1959, s. 2, for “or managing director” (w.e.f. 11-6-1976). 
9. Ins. by Act 35 of 1964, s. 7 (w.e.f. 1-12-1964). 
10. Subs. by Act 48 of 1973, s. 7, for “secretary and treasurer” (w.e.f. 26-6-1974). 

14 

 
 
 
 
 
 
 
 
1[(da) in the case of a director appointed under clause (ca) or clause (cb) 2*** of section 19,— 

(i) he is not serving in the State Bank or has not been serving in it for a continuous period of 

at least five years; and 

(ii)  he is of such age that there is a likelihood of his attaining the age of superannuation 

during his term of office as a director; or] 

(e) he is or at any time has been adjudicated an insolvent or has suspended payment of his debts 

or has compounded with his creditors; or 

(f) he is declared lunatic or becomes of unsound mind; or 

(g) he is or has been convicted of any offence involving moral turpitude; or 
3[(h)  in  the  case  of  an  elected  director,  he  is  not  registered  as  a  holder  in  his  own  right  of 
unencumbered shares in the State Bank, either as sole holder or as first named holder when jointly 
held, of a nominal value of at least five thousand rupees.] 

(2) No two persons who are partners of the same firm or are directors of the same private company or 
one of whom is an agent of the other or holds a power of attorney from a firm of which the other is a 
partner may be directors of the Central Board or members of the same Local Board or Local Committee at 
the same time. 

(3) The appointment, nomination or election as director or member of a Local Board or of a Local 
Committee of any person who is a member of Parliament or the Legislature, of any State shall be void 
unless within two months of the date of his appointment, nomination or election he ceases to be a member 
of  Parliament  or  the  State  Legislature,  and  if  any  director  or  member  of  a  Local  Board  or  of  a  Local 
Committee is elected or nominated as a member of Parliament or any State Legislature, he shall cease to 
be a director or member of the Local Board or of Local Committee as from the date of such election or 
nomination, as the case may be. 
4[(4) In this section,— 

(a)  “banking company” has the same meaning  as  in  the  5 [Banking  Regulation  Act,  1949  

(10 of 1949)]; 

(b)  “manager” means the chief executive officer, by whatever name called, of a Banking 

company; 

(c) “private company” has the same meaning as in the Companies Act, 1956 (1 of 1956)]. 

23 .Vacation of office of directors, etc.—If a director of the Central Board or a member of a Local 

Board or a Local Committee— 

(a) becomes subject to any of the disqualifications mentioned in section 22; or 

(b) resigns his office by giving notice in writing under his hand, in the case of the 6[chairman 7*** 
and amanaging director] to the Central Government and in the case of other directors or members of 
Local Boards or Committees, to the Central Board, and the resignation is accepted; or 

(c)  is  absent  without  leave  of  the  Central  Board,  the  Local  Board  or  the  Local  Committee  of 
which  he  is  a  director  or  member,  as  the  case  may  be,  for  more  than  three  consecutive  meetings 
thereof; 

his seat shall thereupon become vacant. 

1. Ins. by Act 48 of 1973, s. 7 (w.e.f. 26-6-1974). 
2. The words, brackets and figure “of sub-section (1)” omitted by Act 3 of 1994, s. 13 (w.e.f. 15-10-1993). 
3. Subs. by Act 27 of 2010, s. 16, for clause (h) (w.e.f. 15-9-2010). 
4. Ins. by Act 26 of 1959, s. 2 (w.e.f. 28-8-1959). 
5. Subs. by Act 3 of 1994, s. 13, for “Banking Companies Act, 1949” (w.e.f. 15-10-1993). 
6. Subs. by Act 73 of 1976, s. 4, for “the chairman and vice-chairman” (w.e.f. 11-6-1976). 
7. The word “, vice-chairman” omitted by Act 27 of 2010, s. 17 (w.e.f. 15-9-2010). 

15 

 
 
 
 
1[Provided that nothing in clause (c) shall apply to the chairman in relation to his membership of a 

Local Board or of a Local Committee.] 

24. Removal from office of directors, etc.—(1) The Central Government may, after consulting the 

Reserve Bank, remove from office 2[the chairman 3*** or a managing director.] 

4* 

* 

* 

* 

* 

(3) The Central Government, 5*** may remove from office any director6[appointed under clause (ca) 
or clause (cb) or nominated under clause(d) 7[of section 19] 8[or any member of a Local Board nominated 
under clause (c) of sub-section (1) of section 21] and  9[appoint or nominate, as the case may be], in his 
stead another person to fill the vacancy. 

(4) The shareholders, other than the 10[Central Government], may, by a resolution passed by majority, 
of the votes of such shareholders holding in the aggregate not less than one-half of the share capital held 
by all such shareholders, remove any director elected under clause (c) 11***of section 19 and elect in his 
stead another person to fill the vacancy. 

12* 

* 

* 

* 

* 

(6) No person shall be removed from his office under sub-section (1) 13*** or sub-section (3) unless 

he has been given an opportunity of showing cause against his removal. 

14[24A. Supersession of Central Board in certain cases.—(1) Where the Central Government, on 
the  recommendation  of  the  Reserve  Bank  is  satisfied  that  in  the  public  interest  or  for    preventing  the 
affairs of the State Bank being conducted in a manner detrimental to the interest of the depositors or the 
State Bank or for securing the proper management of the State Bank, it is necessary so to do, the Central 
Government  may,  for  reasons  to  be  recorded  in  writing,  by  order,  supersede  the  Central  Board  for  a 
period not exceeding six months as may be specified in the order: 

Provided that the period of supersession of the Central Board may be extended from time to time, so, 

however, that the total period shall not exceed twelve months. 

(2)  On  supersession  of  the  Central  Board  under  sub-section  (1),  the  Central  Government  may,  in 
consultation  with  the  Reserve  Bank,  appoint  an  Administrator  (not  being  an  officer  of  the  Central 
Government  or  a  State  Government)  who  has  experience  in  law,  finance,  banking,  economics  or 
accountancy, for such period as it may determine. 

(3)  The  Central  Government  may  issue  such  directions  to  the  Administrator  as  it  may  consider 

necessary and the Administrator shall be bound to follow such directions. 

(4)  Notwithstanding  anything  contained  in  this  Act,  upon  making  the  order  of  supersession  of  the 

Central Board— 

(a)  the chairman, managing director and other directors shall, as from the date of supersession, 

vacate their offices as such; 

(b) all the powers, functions and duties which may, by or under the provisions of this Act or any 
other  law  for  the  time  being  in  force,  be  exercised  and  discharged  by  or  on  behalf  of  the  Central 
Board, or by a resolution passed in the general meeting of the State Bank, shall, until the  Central 

1. The proviso added by Act 21 of 1957, s. 3 (w.e.f. 11-6-1976). 
2. Subs. by Act 73 of 1976, s. 4, for “the chairman or the vice-chaiman” ( w.e.f. 11-6-1976). 
3. The word “, vice-chairman” omitted by Act 27 of 2010, s. 18 (w.e.f. 15-9-2010). 
4. Omitted by Act 73 of 1976, s. 4 (w.e.f. 11-6-1976). 
5. The words “after consulting the Reserve Bank,” omitted by Act 27 of 2010, s. 18 (w.e.f. 15-9-2010). 
6. Subs. by Act 48 of 1973, s. 8, for “nominated under clause (d)” (w.e.f. 1-7-1974). 
7. Subs. by Act 3 of 1994, s. 14, for “sub-section (1) of section 19” (w.e.f. 15-10-1993). 
8. Ins. by Act 35 of 1964, s. 8 (w.e.f. 1-12-1964). 
9. Subs. by Act 48 of 1973, s. 8 for “nominate” (w.e.f. 1-7-1974). 
10. Subs. by Act 32 of 2007, s. 8, for “Reserve Bank” (w.e.f. 29-6-2007). 
11. Certain words omitted by Act 3 of 1994, s. 14 (w.e.f. 15-10-1993). 
12. Omitted by s. 14, ibid. (w.e.f. 15-10-1993). 
13. The words, bracket and figure “or sub-section (2)” omitted by Act 73 of 1976, s. 4 (w.e.f. 11-6-1976). 
14. Ins. by Act 27 of 2010, s. 19 (w.e.f. 15-9-2010). 

16 

 
 
Board  is  reconstituted,  be  exercised  and  discharged  by  the  Administrator  appointed    under    sub-
section (2): 

Provided that the powers exercised by the Administrator shall be valid notwithstanding that such 

power is also exercisable by a resolution passed in the general meeting of the State Bank. 

(5) The Central Government may, in consultation with the Reserve Bank, constitute a committee of 
three or more persons who have experience in law, finance, banking, economics or accountancy to assist 
the Administrator in the discharge of his duties. 

(6) The committee shall meet at such times and places and observe such rules of procedure as may be 

specified by the rules made under this Act. 

(7) The salary and allowances of the Administrator and the members of the committee shall be such 

as may be specified by the rules made under this Act and be payable by the State Bank. 

(8) On and before the expiration of two months before the expiry of the period of supersession of the 
Central  Board,  the  Administrator  of  the  State  Bank  shall  call  the  general  meeting  of  the  State  Bank  to 
elect new directors and re-constitute the said Board. 

(9)  Notwithstanding  anything  contained  in  any  other  law  for  the  time  being  in  force  or  in  any 
contract, no person shall be entitled to claim any compensation for the loss or termination of his office on 
supersession of the Central Board. 

(10)  The Administrator appointed under sub-section (2) shall vacate office immediately after the re-

constitution of the Central Board.] 

25. Casual vacancies.—1[(1) If the chairman,  2*** or a managing director is rendered incapable of 
discharging  his  duties  by  reason  of  infirmity  or  otherwise  or  is  absent  on  leave  or  otherwise  in 
circumstances not involving the vacation of his office, the Central Government may, in consultation with 
the Reserve Bank, appoint another person to officiate in the vacancy.] 

3[(2) Where any vacancy occurs before the expiry of the term of office of a director, other than the 
Chairman,  2***  or  a  managing  director  or  4[a  director  appointed  under  clause  (ca)  or  5[clause  (cb)  of 
section 19 or of a member of a Local Board other than the Chief General Manager] the vacancy shall be 
filled— 

(a) in the case of an elected director, by election; and 

(b)  in  the  case  of  a  director  nominated  under  clause  (d)  of  section  19  or  a  member  of  a  Local 

Board nominated under clause (c) of sub-section (1) of section 21, by nomination 6***: 

Provided that where the duration of the vacancy in the office of an elected director is likely to be less 
than  six  months,  the  vacancy  may  be  filled  by  the  remaining  directors]  by  co-opting  a  person  not 
disqualified under section 22.] 

(3) A person elected or nominated or co-opted, as the case may be, 7[under sub-section (2)] shall hold 

office for the unexpired portion of the term of his predecessor. 

8[(4) Where any vacancy occurs before the expiry of the term of office of a director appointed under 
clause  (ca)  or  clause  (cb)  9***  of  section  19,  such  vacancy  shall  be  filled  in  accordance  with  the  said 
clause (ca) or as the case may be, clause (cb), and the director so appointed shall hold office for the period 
specified under sub-section (3A) of section 20.] 

1. Subs. by Act 73 of 1976, s. 4, for sub-section (1) w.e.f. 11-6-1976). 
2. The word “, vice-chairman” omitted by Act 27 of 2010, s. 20 (w.e.f. 15-9-2010). 
3. Subs. by Act 35 of 1964, s. 9, for sub-section (2) (w.e.f. 1-12-1964). 
4. Subs. by Act 48 of 1973, s. 9, for certain words (w.e.f. 1-7-1974). 
5. Subs. by Act 3 of 1994, s. 15, for certain words, brackets, letters and figure (w.e.f. 15-10-1993). 
6. The words “in consultation with the Reserve Bank” omitted by Act 27 of 2010, s. 20 (w.e.f. 15-9-2010). 
7. Subs. by Act 48 of 1973, s. 9, for “under this section” (w.e.f. 1-7-1974). 
8. Ins. by s. 9, ibid. (w.e.f. 1-7-1974). 
9. The words, brackets and figure “by sub-section (1)” omitted by Act 3 of 1994, s. 15 (w.e.f. 15-10-1993). 

17 

 
 
 
26. Remuneration of directors.—(1) Without prejudice to the provisions contained in sections 27, 
28 and 29, the directors shall be paid such fees and allowances for attending the meetings of the Central 
Board  or  of  any  of  its  Committees  and  for  attending  to  any  other  work  of  the  State  Bank  as  may  be 
prescribed. 

(2)  Notwithstanding  anything  contained  in  sub-section  (1),  no  fees  shall  be  payable  to  a  managing 

director or any other director who is an officer of the Central Government or the Reserve Bank. 

27. Powers and remuneration of chairman.—(1) The Chairman shall preside at all meetings of the 
Central Board and subject to such general or special directions as the Central Board may give, exercise all 
such powers and do all such acts and things as may be exercised or done by the State Bank. 

(2) The chairman shall receive such salary, fees, allowances and perquisites1[as may be determined  

by the Central Government]. 

2* 

* 

* 

* 

* 

28. [Powers and remuneration of vice-chairman.] Omitted by the State Bank of India (Amendment) 

Act, 2010 (27 of 2010), s. 21 (w.e.f. 15-9-2010). 

29. Powers and remuneration of managing director.—(1) A managing director— 

(a) shall be a whole-time officer of the State Bank; 3*** 

(b) subject to the general control of the chairman 4***, shall exercise such powers and perform 

such duties as may be entrusted or delegated to him by the Central Board 5[; and] 

5[(c) when authorised by the chairman, shall preside at the meetings of the Central Board in his 

absence.] 

(2)  A  managing  director  shall  receive  such  salary  and  allowances6[as  may  be  determined  by  the 

Central Government]. 

7* 

* 

* 

* 

* 

30.  Executive  and  other  committees  of  the  Central  Board.—The  Central  Board  may  constitute 
such and so many committees, including an executive committee, of itself as it deems fit to exercise such 
powers  and  perform  such  duties  as  may,  subject  to  such  conditions,  if  any,  as  the  Central  Board  may 
impose, be delegated to them by the Central Board. 

31. Meetings of the Central Board.—8[(1) The Central Board shall meet at such time and place and 
shall observe such rules of procedure in regard to the transaction of business at its meetings as may be 
prescribed;  and  the  meeting  of  the  Central  Board  may  be  held  by  participation  of  the  directors  of  the 
Central Board through videoconferencing or such other electronic means, as may be prescribed, which are 
capable  of  recording  and  recognising  the  participation  of  the  directors  and  the  proceedings  of  such 
meetings are capable of being recorded and stored: 

Provided that the Central Government may in consultation with the Reserve Bank, by notification in 
the Official Gazette, specify the matters which shall not be discussed in a meeting of the Central Board 
held through videoconferencing or such other electronic means. 

(2) All questions at the meeting shall be decided by a majority of the votes of the directors present in 
the meeting or through videoconferencing or such other electronic means and in the case of equality of 
votes  the  chairman  or,  in  his  absence,  the  managing  director  authorised  by  the  chairman  shall  have  a 
second or casting vote.] 

1. Subs. by Act 73 of 1976, s. 4, for certain words (w.e.f. 11-6-1976). 
2.  The proviso omitted by s. 4, ibid. (w.e.f. 11-6-1976). 
3. The word “and” omitted by Act 27 of 2010, s. 22 (w.e.f. 15-9-2010). 
4. The words “and the vice-chairman” omitted by s. 22, ibid. (w.e.f. 15-9-2010). 
5. Ins. by s. 22, ibid. (w.e.f. 15-9-2010). 
6. Subs. by Act 73 of 1976, s. 4, for certain words (w.e.f. 11-6-1976). 
7.  The proviso omitted by s. 4, ibid. (w.e.f. 11-6-1976). 
8. Subs. by Act 27 of 2010, s. 23, for sub-section (1) and (2) (w.e.f. 15-9-2010). 

18 

 
 
 
(3) A director who is directly or indirectly concerned or interested in any contract, loan, arrangement 
or  proposal  entered  into  or  proposed  to  be  entered  into  by  or  on  behalf  of  the  State  Bank  shall  at  the 
earliest  possible  opportunity  disclose  the  nature  of  his  interest  to  the  Central  Board  and  shall  not  be 
present  at  any  meeting  of  the  Central  Board  when  any  such  contract,  loan,  arrangement  or  proposal  is 
discussed unless his presence is required by the other directors for the purpose of eliciting information, 
and no director so required to be present shall vote on any such contract, loan, arrangement or proposal. 

1[Provided that nothing contained in this sub-section shall apply to such director by reason only of his 

being— 

(i) a shareholder (other than a director) holding not more than two per cent. of the paid-up capital 
in  any  public  company  as  defined  in  the  Companies  Act,  1956  (1  of  1956)  or  any  corporation 
established by or under any law for the time being in force in India or any co-operative society with 
which  or  to  which  the  State  Bank  has  entered  into  or  made,  or  proposes  to  enter  into  or  make,  a 
contract, loan, arrangement or proposal; or 

(ii) a director ex officio of the State Bank 2***,3[or]] 

4 [(iii) an officer or other employee of the State Bank, if he is a director appointed under 

clause(ca) or clause (cb) 5*** of section 19.] 

(4) If for any reason neither the chairman nor the vice-chairman is able to be present at a meeting of 
the  Central  Board,  any  director,  6***authorised  by  the  chairman  in  writing  in  this  behalf,  and  in  the 
absence  of  such authorisation,7[any  director] elected by  the  directors present  from  amongst  themselves, 
shall preside at the meeting and, in the event of equality of votes, shall have a second or casting vote. 

8[31A. Meetings of Local Boards.—(1) A Local Board shall meet at such time and place and shall 
observe  such  rules  of  procedure  in  regard  to  the  transaction  of  business  at  its  meetings  as  may  be 
prescribed. 

(2) All questions at the meeting shall be decided by a majority of the votes of  the members present 
and in the  case of equality  of  votes,  the  person  presiding  at  the  meeting  shall  have  a  second  or  casting 
vote. 

(3) A member who is directly or indirectly concerned or interested in any contract, loan, arrangement 
or  proposal  entered  into  or  proposed  to  be  entered into  by  or  on  behalf  of the State  Bank,  shall,  at the 
earliest possible opportunity, disclose the nature of his interest to the Local Board and shall not be present 
at  any  meeting  of  the  Local  Board  when any  such  contract,  loan,  arrangement  or  proposal  is  discussed 
unless  his  presence  is  required  by  the  other  members  for  the  purpose  of  eliciting  information,  and  no 
member so required to be present shall vote on any such contract, loan, arrangement or proposal: 

Provided that nothing contained in this sub-section shall apply to such member by reason only of his 

being— 

(i) a shareholder (other than a director) holding not more than two per cent. of the paid-up capital 
in  any  public  company  as  defined  in  the  Companies  Act,  1956  (1  of  1956),  or  any  corporation 
established by or under any law for the time being in force in India or any co-operative society, with 
which  or  to  which  the  State  Bank  has  entered  into  or  made  or  proposes  to  enter  into  or  make,  a 
contract, loan, arrangement or proposal; or 

(ii) a director ex officio of the State Bank 9***. 

1. Ins. by Act 56 of 1962, s. 2 (w.e.f. 1-1-1963). 
2. The words “or a director of a subsidiary bank” omitted by Act 19 of 2018, s. 5 (w.e.f. 1-4-2017). 
3. Added by Act 48 of 1973, s. 10 (w.e.f. 1-7-1974). 
4. Ins. by s. 10, ibid. (w.e.f. 26-6-1976). 
5. The words, brackets and figure “of sub-section (1)” omitted by Act 3 of 1994, s. 16 (w.e.f. 15-10-1993). 
6. The words “, other than a managing director” omitted by Act 48 of 1973, s. 10 (w.e.f. 1-7-1974). 
7. Subs. by s. 10, ibid., for “any such director” (w.e.f. 1-7-1974). 
8. Ins. by Act 35 of 1964, s. 10 (w.e.f. 1-2-1964). 
9. The words “or a director of a subsidiary bank” omitted by Act 19 of 2018, s. 6 (w.e.f. 1-4-2017). 

19 

 
 
(4) If for any reason neither the president nor the vice-president is able to be present at a meeting of 
the Local Board, any member,1[other than the Chief General Manager] elected by the members present 
from amongst themselves, shall preside at the meeting. 

(5) Notwithstanding anything contained in this section, the chairman shall preside at any meeting of a 
Local Board at which he is present and in the absence of the chairman, 2[the managing director authorised 
by the chairman], shall, whenever he is present, preside at such meetings.] 

CHAPTER VI 

BUSINESS OF THE STATE BANK 

32. State Bank to act as agent of the Reserve Bank.—(1) The State Bank shall, if so required, by 
the Reserve Bank, act as agent of the Reserve Bank at all places in India where it has a branch  3*** and 
where there is no branch of the banking department of the Reserve Bank, for— 

(a)  paying,  receiving,  collecting  and  remitting  money,  bullion  and  securities  on  behalf  of  any 

Government in India; and 

(b)  undertaking  and  transacting  any  other  business  which  the  Reserve  Bank  may  from  time  to 

time entrust to it. 

(2)  The  terms  and  conditions  on  which  any  such  agency  business  shall  be  carried  on  by  the  State 

Bank on behalf of the Reserve Bank shall be such as may be agreed upon. 

(3) If no agreement can be reached on any matter referred to in sub-section (2) or if a dispute arises 
between the State Bank and the Reserve Bank as to the interpretation of any agreement between them, the 
matter shall be referred to the Central Government and the decision of the Central Government thereon 
shall be final. 

(4)  The  State  Bank  may  transact  any  business  or  perform  any  functions  entrusted  to  it  under  sub-

section (1) 4[by itself 5***] or through an agent approved by the Reserve Bank. 

6  [33.  Other  business  which  the  State  Bank  may  transact.—Subject  to  the  other  provisions 
contained  in  this  Act,  the  State  Bank  may  carry  on  and  transact  the  business  of  banking  as  defined  in 
clause (b) of section 5 of the Banking Regulation Act, 1949 (10 of 1949), and may engage in one or more 
of the other forms of business specified in sub-section (1) of section 6 of that Act.] 

34. Business which the State Bank may not transact.—7***. 

(6)  Save  as  otherwise  provided  in8[this  Act]  the  State  Bank  shall  not  own  or,  acquire  any  9*** 
immovable  property  except  for  the  purpose  of  providing  buildings  or  other  accomodation  in  which  to 
carry on the business of the State Bank or for providing residences for its officers and other employees: 

Provided that if any such building or other accommodation is not immediately required for any of the 
purposes of the State Bank, the State Bank may utilise it to the best advantage by letting it out or in any 
other manner. 

35.  State  Bank  may  acquire  the  business  of  other  Banks.—(1)  The  State  Bank  may,  with  the 
sanction of the Central Government, and shall, if so directed by the Central Government in consultation 
with  the  Reserve  Bank,  enter  into  negotiations  for  acquiring  the  business,  including  the  assets  and 
liabilities, of any banking institution. 

1. Subs. by Act 48 of 1973, s. 11, for certain words (w.e.f. 1-7-1974). 
2. Subs. by Act 27 of 2010, s. 24, for “the vice-chairman, if he is a member of the Local Board” (w.e.f. 15-9-2010). 
3. The words “or where there is a branch of a subsidiary bank” omitted by Act 19 of 2018, s. 7 (w.e.f. 1-4-2017). 
4. Subs. by Act 38 of 1954, s. 64 and the Third Schedule, for “either by itself” (w.e.f. 10-9-1959). 
5. The words “or through a subsidiary bank” omitted by Act 19 of 2018, s. 7 (w.e.f. 1-4-2017). 
6. Subs. by Act 48 of 1973, s. 12, for section 33 (w.e.f. 1-3-1977). 
7. Sub-sections (1), (2), (3) or (5) omitted by s. 13, ibid. (w.e.f. 1-3-1977).Earlier sub-section (3) was substituted for sub-sections 

(3) or (4) by Act 29 of 1959, s. 5 (w.e.f. 1-3-1977). 

8. Subs. by Act 56 of 1962, s.2, for “section 33” (w.e.f. 1-1-1963). 
9. The words “interest in” omitted by s. 2, ibid.  (w.e.f. 1-1-1963). 

20 

 
 
 
1[(2) The terms and conditions relating to such acquisition, if agreed upon by the Central Board of the 
State Bank and the directorate or management of the banking institution concerned and approved by the 
Reserve Bank, shall be submitted to the Central Government for its sanction and that Government may by 
order in writing (hereafter in this section referred to as the order of sanction) accord its sanction thereto. 

(3) Notwithstanding anything contained in this Act or any other law for the time being in force or any 
instrument  regulating  the  constitution  of  the  banking  institution  concerned,  the  terms  and  conditions  as 
sanctioned  by  the  Central  Government  shall  come  into  effect  on  the  date  specified  by  the  Central 
Government in this behalf in the order of sanction and be binding upon the State Bank and the banking 
institution concerned as well as upon the shareholders (or, as the case may be, proprietors) and creditors 
of that banking institution. 

(4)  If  for  any  reason  the  terms  and  conditions  cannot  come  into  effect  on  the  date  specified  in  the 

order of sanction, the Central Government may fix another suitable date for that purpose. 

(5) On the date on which the terms and conditions as aforesaid come into effect the business and the 
assets and liabilities of the banking institution concerned as covered by the acquisition shall, by virtue, 
and  in  accordance  with  the  provisions,  of  the  order  of  sanction  stand  transferred  to,  and  become 
respectively the business and the assets and liabilities of, the State Bank. 

(6) The consideration for the acquisition of the business and the assets and liabilities of any banking 
institution under this section may, if so agreed upon, be paid either in cash or by allotment of shares in the 
capital of the State Bank or partly in cash and partly by allotment of shares, and the State Bank may, for 
the purpose of any such allotment, increase, subject to the other provisions contained in this Act relating 
to the increase of capital, the capital of the State Bank by the issue of such number of shares as may be 
determined by the State Bank. 

(7)  Any  business  acquired  under  this  section  shall  thereafter  be  carried  on  by  the  State  Bank  in 
accordance  with  the  provisions  of  this  Act,  subject  to  such  exemptions  or  modifications  as  the  Central 
Government  may,  by  notification  in  the  Official  Gazette,  make  in  this  behalf  in  consultation  with  the 
Reserve Bank: 

Provided that no such exemption or modification shall be made so as to have effect for a period of 

more than seven years from the date of acquisition. 

(8) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any 
other law or in any agreement for the time being in force, on the acquisition of the business and the assets 
and liabilities of any banking institution under this section, no officer or other employee of that banking 
institution shall be entitled to any compensation to which he may be entitled under that Act or that other 
law or that agreement and no claim in respect of such compensation shall be entertained by any Court, 
Tribunal or other authority, if on his having accepted in writing an offer of employment by the State Bank 
on  the  terms  and  conditions  proposed  by  it  he  has  been  employed  in  accordance  with  such  terms  and 
conditions. 

(9) The Central Government may, if it considers necessary or expedient in the case of any banking 
institution  in  relation  to  which  an  order  of  sanction  has  been  made  under  this  section,  appoint  whether 
before or after the coming into effect of the terms and conditions relating to the acquisition of the business 
and the assets and liabilities of that banking institution, a suitable person to take over the management of 
that  banking  institution  for  the  purposes  of  winding  up  its  affairs  and  distributing  its  assets,  and  the 
expenditure incurred in connection with such management (including the remuneration for the person so 
appointed and his staff, if any) shall be paid out of the assets of the banking institution or by the State 
Bank as the Central Government may direct. 

(10) Simultaneously with the appointment of a suitable person to take over the management of any 
banking  institution  under  sub-section  (9)  or immediately  thereafter,  the  Central  Government  shall issue 
directions to be followed by that person in the management of that banking institution for the purposes 
aforesaid and thereupon— 

1. Subs. by Act 26 of 1959, s. 6, for sub-sections (2), (3) and (4) (w.e.f. 28-8-1959). 

21 

 
 
 
(a) the provisions of the Companies Act, 1956 (1 of 1956), or the 1[Banking Regulation Act, 1949 
(10 of 1949),] or any other law for the time being in force or any instrument having effect by virtue of 
any such Act or law, in so far as they are inconsistent with such directions, shall cease to apply to or 
in relation to that banking institution; 

(b) all persons in charge of the management, including any person holding office as manager or 
director of the banking institution immediately before the issue of such directions, shall be deemed to 
have vacated their offices as such; and 

(c)  the  persons  appointed  to  take  over  the  management  of  the  banking  institution  shall  in 
accordance with those directions take all such steps as may be necessary to facilitate the winding up 
of its affairs and distribution of its assets. 

(11) The Central Government, when satisfied that nothing further remains to be done in order to wind 
up the affairs of any such banking institution, may by another order in writing direct that as from such 
date  as  may  be  specified  therein  the  banking  institution  shall  stand  dissolved  and  thereupon  any  such 
direction shall have effect notwithstanding anything to the contrary contained in any other law. 

(12)  No  action  under  this  section  shall  be  questioned  on  the  ground  merely  of  any  defect  in  the 
constitution  of  any  banking  institution  in  relation  to  which  such  action  has  been  taken  or  in  the 
constitution of its Board of Directors or in the appointment of any person entrusted with the management 
of its affairs. 

(13)  In  this  section  “banking  institution”  includes  any  individual  or  any  association  of  individuals 
(whether incorporated or not, or whether a department of Government or a separate institution), carrying 
on the business of banking.] 

2[35A. Arrangement with the State Bank on appointment of directors to prevail.—(1) Where any 
arrangement  entered  into  by  the  State  Bank  with  a  company  provides  for  the  appointment  by  the  State 
Bank of one or more directors of such company, such provisions and any appointment of directors made 
in pursuance thereof shall be valid and effective notwithstanding anything to the contrary contained in the 
Companies Act, 1956 (1 of 1956), or in any other law for the time being in force or in the memorandum, 
articles of association or any other instrument relating to the company, and any provision regarding share 
qualification, age limit, number of directorships, removal from office of directors and such like conditions 
contained in any such law or instrument aforesaid, shall not apply to any director appointed by the State 
Bank in pursuance of the arrangement as aforesaid. 

(2) Any director appointed as aforesaid shall— 

(a)  hold office during the pleasure of the State Bank and may be removed or substituted by any 

person by order in writing of the State Bank; 

(b) not incur any obligation or liability by reason only of his being a director or for anything done 
or omitted to be done in good faith in the discharge of his duties as a director or anything in relation 
thereto; 

(c) not be liable to retirement by rotation and shall not be taken into account for computing the 

number of directors liable to such retirement.] 

CHAPTER VII 

FUNDS, ACCOUNTS AND AUDIT 

36.  Integration  and  Development  Fund.—(1)  The  State  Bank  shall  maintain  a  special  fund  to  be 

known as the Integration and Development Fund into which shall be paid— 

1. Subs. by Act 3 of 1994, s. 17, for “Banking Companies Act, 1949” (w.e.f. 15-10-1993). 
2. Ins. by Act 1 of 1984, s. 43 (w.e.f. 15-2-1984). 

22 

 
 
 
 
 
 
 
(a) the dividends payable to the 1[Central Government] on such shares of the State Bank held by 

it as do not exceed fifty-five per cent. of the total issued capital; and 

(b) such contributions as the 2*** the Central Government may make from time to time. 

3[Provided that if the balance in the Integration and Development Fund on the date of declaration of 
any  dividends  by  the  State  Bank  is  rupees  five  crores  or  more,  no  amount  shall  be  paid into that  Fund 
under  clause  (a)  and  the  dividends  payable  to  the  1[Central  Government]  shall  be  4  [paid  to  that 
Government], and if such balance on such date is less than rupees five crores, only so much of dividends 
then payable as will bring such balance to rupees five crores shall be paid into that Fund and the balance 
of such dividends shall be paid to the 1[Central Government].] 

(2) The amount in the said Fund shall be applied exclusively for meeting— 

(a)  losses  in  excess  of  such  yearly  sum  as  may  be  agreed  upon  between  the  1[Central 
Government]  and  the  State  Bank  and  attributable  to  the  branches  established  in  pursuance  of  sub-
section (5) of section 16; 5*** 

6* 

* 

* 

* 

* 

* 

(b)  such  other  losses  or  expenditure  as  may  be  approved  by  the  Central  Government  in 

consultation with the Reserve Bank. 

(3) Subject to the provisions of sub-section (2), the said Fund shall be the property, of the  1[Central 
Government] and no shareholder of the State Bank or any other person shall have any claim to the amount 
held in the said Fund. 

7[(4) No amount applied for any of the purposes specified in sub-section (2) shall, for the purposes of 

the 8[Income-tax Act, 1961 (43 of 1961)], be treated as income, profits or gains of the State Bank.] 

37. Reserve Fund.—The State Bank shall establish a Reserve Fund which shall consist of— 

(a) the amount held in the Reserve Fund of the Imperial Bank transferred to the State Bank on the 

appointed day; and 

(b) such further sums as may be transferred to it by the State Bank out of its annual net profits 

before declaring a dividend. 

38.  Disposal  of  profits.—(1)  After  making  provision  for  bad  and  doubtful  debts,  depreciation  in 
assets, equalisation of dividends, contribution to staff and superannuation funds and for all other matters 
for  which  provisions  is  necessary  by  or  under  this  Act  or  which  are  usually  provided  for  by  banking 
companies, the State Bank may, out of its net profits, declare a dividend. 

(2)  Subject  to  the  provisions  of  paragraph  6  of  the  First  Schedule,  the  rate  of  dividend  shall  be 

determined by the Central Board. 

9[38A.  Transfer  of  unpaid  or  unclaimed  dividend.—(1)  Where,  after  the  commencement  of  the 
State Bank of India (Amendment) Act, 2010 (27 of 2010), a dividend has been declared by the State Bank 
but which has not been paid to a shareholder or claimed by any shareholder entitled to it, within thirty 
days from the date of declaration, the State Bank shall, within seven days from the date of expiry of the 
said period of thirty days, transfer the total amount of dividend which remains unpaid, or unclaimed, to a 
special account to be named, the “unpaid dividend account” maintained by it. 

1. Subs. by Act 32 of 2007, s. 9, for “Reserve Bank” (w.e.f. 29-6-2007). 
2. The words “the Reserve Bank or” omitted by s. 9, ibid. (w.e.f. 29-6-2007). 
3. The proviso added by Act 35 of 1964, s. 12 (w.e.f. 1-12-1964). 
4. Subs. by Act 32 of 2007, s. 9, for “paid to that Bank” (w.e.f. 29-6-2007). 
5. The word “and” omitted by Act 38 of 1959, s. 64 and the Third Schedule (w.e.f. 10-9-1959). 
6. Clause (aa) omitted by Act 19 of 2018, s. 8 (w.e.f. 1-4-2017). 
7. Ins. by Act 26 of 1959, s. 7 (w.e.f. 28-8-1959). 
8. Subs. by Act 3 of 1994, s. 18, for “Indian Income-tax Act, 1922 (11 of 1922)” (w.e.f. 15-10-1993). 
9. Ins. by Act 27 of 2010, s. 25 (w.e.f. 15-9-2010). 

23 

 
 
 
 
Explanation.—In  this  sub-section,  the  expression  “dividend  which  remains  unpaid”  means  any 
dividend the warrant in respect thereof has not been encashed or which has otherwise not been paid or 
claimed. 

(2)  Where  the  whole  or  any  part  of  any  dividend,  declared  by  the  State  Bank  before  the 
commencement of the State Bank of India (Amendment) Act, 2010 (27 of 2010), remains unpaid at such 
commencement, the State Bank shall, within a period of six months from such commencement, transfer 
such unpaid amount to the account referred to in sub-section (1). 

(3)  Any  money  transferred  to  the  unpaid  dividend  account  of  the  State  Bank,  in  pursuance  of  this 
section which remains unpaid or unclaimed for a period of seven years from the date of such transfer shall 
be  transferred  by  the  State  Bank  to  the  Investor  Education  and  Protection  Fund  established  under  sub- 
section (1) of section 205C of the Companies Act, 1956 (1 of 1956) for being utilised for the purpose and 
in the manner specified in that section.] 

39. Books to be balanced each year.—The Central Board shall cause the books of the State Bank to 
be closed, and balanced 1[as] on the 31st day of 2[March] 3[or such other date in each year as the Central 
Government may, by notification in the Official Gazette, specify:] 

4  [Provided  that  with  a  view  to    facilitating    the    transition    from    one    period    of    accounting  to  
another period of accounting under this section, the Central Government may, by order published in the 
Official  Gazette,  make  such  provisions  as  it  considers  necessary  or  expedient  for  the  closing  and 
balancing of, or for other matters relating to, the books in respect of the concerned years.] 

40. Returns.—(1) The State Bank shall furnish to the Central Government and to the Reserve Bank 
5[within three months from the 31st day of  6[March]  7[or the date specified under section 39, as the case 
may be] as on which its books are closed and balanced]; its balance sheet, together with the profit and loss 
account and the8[auditor’s report and a report by the Central Board on the working and activities of the 
State Bank] during the period covered by the accounts: 

9[Provided  that  the  Central  Government  may,  after  consultation  with  the  Reserve  Bank,  extend  the 

said period of three months by such further period, not exceeding three months, as it may think fit.] 

10[(2) The balance sheet and the profit and loss account shall be signed by the chairman, managing 

directors and at least three other directors of the Central Board.] 

(3) The State Bank shall also, within two months from the date on which its accounts are closed and 
balanced, transmit to the Central Government and the Reserve Bank a statement showing, as far as may 
be available, the name, address and occupation of, and the number of shares held by, each shareholder of 
the State Bank as on the said date. 

11[(4) The Central Government shall cause the auditors’ report and the report by the Central Board on 
the working and activities of the State Bank to be laid, as soon as may be after they are received, before 
each House of Parliament 12***. 

1. Ins. by Act 48 of 1973, s. 14 (w.e.f. 31-12-1973). 
2. Subs. by Act 27 of 2010, s. 26, for “December” (w.e.f. 15-9-2010). 
3. Subs. by Act 66 of 1988, s. 14, for “in each year” (w.e.f. 30-12-1988). 
4. The proviso ins. by s. 14, ibid. (w.e.f. 30-12-1988). 
5. Subs. by Act 48 of 1973, s. 15, for certain words (w.e.f. 31-12-1973). 
6. Subs. by Act 27 of 2010, s. 27, for “December” (w.e.f. 15-9-2010). 
7. Ins. by Act 66 of 1988, s. 15 (w.e.f. 30-12-1988). 
8. Subs. by Act 1 of 1984, s. 44, for certain words (w.e.f. 15-2-1984). 
9. The proviso added by Act 48 of 1973, s. 15 (w.e.f. 31-12-1973). 
10. Subs. by Act 27 of 2010, s. 27, for sub-section (2) (w.e.f. 15-9-2010). 
11. Ins. by Act 1 of 1984, s. 44 (w.e.f. 15-2-1984). 
12. Certain words omitted by Act 81 of 1985, s. 3 (w.e.f. 1-5-1986). 

24 

 
 
 
 
 
 
 
 
41.  Audit.—(1)  The  affairs  of  the  State  Bank  shall  be  1[audited  by  two  or  more  auditors]  duly 
qualified to act as auditors of companies under  2[section 226 of the Companies Act, 1956 (1 of 1956)], 
who shall be appointed by 3[the State Bank with the previous approval of the Reserve Bank]. 

(2) The auditors shall receive such remuneration as the Reserve Bank may fix in consultation with the 

Central Government. 

(3)  An  auditor  may  be  a  shareholder  but  not  director  or  member  of  a  Local  Board  or  of  a  Local 
Committee  or  an  officer  of  the  State  Bank  shall  be  eligible  to  be  an  auditor  during  his  continuance  in 
office as such director, member or officer. 

(4) An auditor shall on relinquishing office, be eligible for reappointment. 

(5) The auditors shall severally be, and continue to act as, auditors until the 4[annual] general meeting 
after their respective appointment, and if any vacancy arises before the expiry of the term of office of an 
auditor, the vacancy may be filled by 3[the State Bank with the previous approval of the Reserve Bank]. 

(6)  Every  auditor  shall  be  supplied  with  a  copy  of  the  annual  balance  sheet  and  profit  and  loss 
account, and a list of all books kept by the State Bank, and it shall be the duty of the auditor to examine 
the balance sheet and profit and loss account with the accounts and vouchers relating thereto, and in the 
performance of his duties, the auditor— 

(a)  shall have, at all reasonable times, access to the books, accounts and other documents of the 

State Bank; 

(b) may, at the expense of the State Bank, or if he is appointed by the Central Government, at the 
expense  of  the  Central  Government,  employ  accountants  or  other  persons  to  assist  him  in 
investigating such accounts; and 

(c) may, in relation to such accounts, examine any director or any member of a Local Board or of 

a Local Committee or any officer of the State Bank. 

(7) The  auditors  shall  make  a  report to the  Central  Government  upon  the  annual  balance  sheet  and 

accounts, and in every such report they shall state— 

(a)  whether, in their opinion, the balance sheet is a full and fair balance sheet containing all the 
necessary particulars and properly drawn up so as to exhibit 5[a true and fair view] of the affairs of the 
State Bank, and in case they have called for any explanation or information, whether it has been given 
and whether it is satisfactory; 

(b) whether or not the transactions of the State Bank which have come to their notice have been 

within the powers of the State Bank; 

(c) whether or not the returns received from the offices and branches of the State Bank have been 

found adequate for the purpose of their audit; 

(d)  whether  the  profit  and  loss  account  shows  a  true  balance  of  6[profit  or  loss]  for  the  period 

covered by such account; and 

(e) any other matter which they consider should be brought to the notice of the shareholders or 

the Central Government, as the case may be. 

7[Explanation 1.—For the purposes of this Act,— 

(a) the balance sheet shall not be treated as not disclosing a true and fair view of the affairs of 

the State Bank, and 

1. Subs. by Act 48 of 1973, s. 16, for “audited by two auditors” (w.e.f. 31-12-1973). 
2.  Subs. by Act 26 of 1959, s. 8, for  “sub-section  (1) of section  144  of the  Indian  Companies  Act,  1913  (7  of 1913)”  

(w.e.f. 28-8-1959). 

3. Subs. by Act 27 of 2010, s. 28, for “the Reserve Bank in consultation with the Central Government” (w.e.f. 15-9-2010). 
4. Subs. by Act 26 of 1959, s. 8, for “first” (w.e.f. 28-8-1959). 
5. Subs. by Act 35 of 1964, s. 13, for “a true and correct view” (w.e.f. 1-12-1964). 
6. Subs. by Act 26 of 1959, s. 8, for “profit and loss” (w.e.f. 28-8-1959). 
7. Ins. by Act 48 of 1973, s. 16 (w.e.f. 31-12-1973). 

25 

 
 
(b) the profit and loss account shall not be treated as not showing a true balance of profit or 

loss of the period covered by such account, 

merely, by reason  of the fact that the balance sheet or, as the case may be, the profit and loss account, 
does not disclose any matters which  are,  by  the  provisions  of  the  Banking  Regulation  Act,  1949  
(10 of 1949) read with the relevant provisions of this Act, not required to be disclosed. 

Explanation 2.—For the purposes of this Act, the accounts of the State Bank shall not be deemed 
as having not been properly drawn up on the ground merely that they do not disclose certain matters 
if— 

(i) those  matters  are  such  as  the  State  Bank  is,  by  virtue  of  any  provision  contained  in  the 
Banking Regulation Act, 1949 (10 of 1949), read with the relevant provisions of this Act, or any 
other Act, not required to disclose; and 

(ii) the provisions referred to in clause (i) are specified in the balance sheet and profit and loss 

account of the State Bank or in the auditors’ report]. 

(8) The auditors shall also forward a copy of the audit report to the State Bank. 

(9) Without prejudice to anything contained in the foregoing provisions, the Central Government may 

appoint at any time such auditors as it thinks fit to examine and report on the accounts of the State Bank. 

1[42.  Balance  sheet,  etc.,  of  State  Bank  may  be  discussed  at  general  meeting.—(1)  An  annual 
general  meeting  shall  be  held  in  each  financial  year  at  the  Corporate  Centre  or  at  such  other  place  in 
Mumbai other than the Corporate Centre or at such other place in India and at such time, as shall from 
time  to  time  be  specified  by  the  Central  Board  and  a  general  meeting  other  than  an  annual  general 
meeting may be convened by the State Bank at any other time and at such place in India as shall from 
time to time be specified by the Central Board: 

Provided that such annual general meeting shall be held before the expiry of six weeks from the date 
on  which  the  balance  sheet  together  with  the  profit  and  loss  account  and  auditors'  report,  under  sub- 
section (1) of section 40, is forwarded to the Central Government or to the Reserve Bank, whichever date 
is earlier. 

(2) The shareholders present at an annual general meeting shall be entitled to discuss and adopt the 
balance sheet and the profit and loss account of the State Bank made up to the previous 31st day of March 
or the date specified under section 39, as the case may be, the report of the Central Board on the working 
and  activities  of  the  State  Bank  for  the  period  covered  by  the  accounts  and  the  auditors'  report  on  the 
balance sheet and accounts.] 

CHAPTER VIII 

MISCELLANEOUS 

43.  State  Bank  may  appoint  officers  and  other  employees.—2[(1)]  The  State  Bank  may  appoint 
such  number  of  officers,  advisers  and  employees  as  it  considers  necessary  or  desirable  for the  efficient 
performance of its functions, and determine the terms and conditions of their appointment and service. 

3[(2) The officers, advisers and employees of the State Bank shall individually or jointly or with other 
officers, advisers and employees in a Local Committee exercise such powers and perform such duties as 
may by general or special order, be entrusted or delegated to them by the Central Board or its executive 
committee.] 

4  [43A.  Bonus.—(1)  No  officer,  adviser  or  other  employee  [other  than  an  employee  within  the 
meaning of clause (13) of section 2 of the Payment of Bonus Act, 1965 (21 of 1965)] of the State Bank 
shall be entitled to be paid any bonus. 

1. Subs. by Act 27 of 2010, s. 29, for section 42 (w.e.f. 15-9-2010). 
2. Section 43 renumbered as sub-section (1) thereof by Act 35 of 1964, s. 14 (w.e.f. 1-12-1964). 
3. Subs. by Act 27 of 2010, s. 30, for sub-section (2) (w.e.f. 15-9-2010). 
4. Ins. by Act 64 of 1984, s. 2 (w.e.f. 11-9-1984). 

26 

 
 
 
 
 
(2) No employee of the State Bank, being an employee within the meaning of clause (13) of section 2 
of  the  Payment  of  Bonus  Act,  1965  (21  of  1965),  shall  be  entitled  to  be  paid  any  bonus  except  in 
accordance with the provisions of that Act. 

(3) The provisions of this section shall have effect notwithstanding any judgment, decree or order of 
any Court, tribunal or other authority and notwithstanding anything contained in any other  provision of 
this Act or in the Industrial Disputes Act, 1947 (14 of 1947), or any other law for the time being in force 
or any practice, usage or custom or any contract, agreement, settlement, award or other instrument.] 

44. Obligation  as  to fidelity and  secrecy.—(1) The  State  Bank  shall  observe,  except  as  otherwise 
required by law, the practices and usages customary among bankers, and, in particular, it shall not divulge 
any information relating to or to the affairs of its constituents except in circumstances in which it is, in 
accordance with the law or practice and usage customary among bankers, necessary or appropriate for the 
State Bank to divulge such information. 

(2)  Every  director,  member  of  a  Local  Board  or  of  a  Local  Committee,  auditor,  adviser,  officer  or 
other employee of the State Bank shall, before entering upon his duties, make a declaration of fidelity and 
secrecy as in the form set out in the Second Schedule. 

1[(3) Nothing contained in this section shall apply to the credit information disclosed under the Credit 

Information Companies (Regulation) Act, 2005 (30 of 2005).] 

45. Bar to liquidation of State Bank.—No provision of law relating to the winding up of companies 
shall apply to the State Bank, and the State Bank shall not be placed in liquidation save by order of the 
Central Government and in such manner as it may direct. 

46.  Indemnity  of  directors  and  members  of  Local  Boards  and  Local  Committees,  etc.—(1) 
Every  director  and  every  member  of  a  Local  Board  or  a  Local  Committee  shall  be  indemnified  by  the 
State Bank against all losses and expenses incurred by him in or in relation to the discharge of his duties 
except such as are caused by his own wilful act or default. 

(2) Neither a director nor a member of a Local Board or a Local Committee shall be responsible for 
any loss or expense caused to the State Bank by the insufficiency or deficiency of the value of or title to 
any property or security acquired or taken on behalf of the State Bank or by the insolvency or wrongful 
act of any customer or debtor or by anything done in or in relation to the execution of the duties of his 
office or otherwise than for his wilful act or default. 

47. Defects in appointment or constitution not to invalidate acts or proceedings.—(1) No act or 
proceeding  of  the  Central Board  or  of  a  Local  Board  or  a  Local  Committee  shall  be  questioned  on  the 
ground merely of the existence of any vacancy or defect in the constitution of the Board or Committee, as 
the case may be. 

(2) All acts done by any person acting in good faith as a director or as a member of a Local Board or 
of  a  Local  Committee  shall,  notwithstanding  that  there  was  some  defect  in  his  appointment  or 
qualifications, be as valid as if he was a director of the Central Board or a member of the Local Board or 
the Local Committee, as the case may be. 

48.  [Power to remove difficulties] Omitted by  the  State  Bank  of  India  (Amendment)  Act,  1964 

(35 of 1964), s.15 (w.e.f. 1-12-1964). 

49. Power  of  Central  Government to  make  rules.—(1)  The  Central  Government,  in  consultation 
with the Reserve Bank, may, by notification in the Official Gazette, 2[make rules to provide for all matters 
for  which  provision  is  necessary  or  expedient  for  the  purpose  of  giving  effect  to  the  provisions  of  this 
Act]. 

(2)  In  particular,  and  without  prejudice  to  the  generality  of  the  foregoing  power,  such  rules  may 

provide for— 

(a) the procedure for the payment of compensation under this Act; 

1. Ins. by Act 30 of 2005, s. 34 and the Schedule (w.e.f. 14-12-2006). 
2. Subs. by Act 48 of 1973, s. 18, for certain words (w.e.f. 31-12-1973). 

27 

 
 
 
(b)  the  determination  of  persons  to  whom  the  said  compensation  shall  be  payable  in  all  cases, 
including cases where shares in the Imperial Bank have been held by more than one person, or where 
they have been transferred before the appointed day but the transfer has not been registered or where 
the shareholder is dead; 

1[(c) the manner of appointment of a director under clause (ca) or clause (cb) 2*** of section 19, 

and all other matters connected therewith or incidental thereto;] 

3[(d) the time and place of meeting of the Committee and the rules of procedure to be observed by 

it under sub-section (6) of section 24A; 

(e) the salary and allowances of the Administrator and the members of the committee under sub-

section (7) of section 24A.] 
4[(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after 
it is made, before each House of Parliament while it is in session, for a total period of  thirty days which 
may be comprised in one session or in two or more successive sessions, and if, before the expiry of the 
session  immediately  following  the  session  or  the  successive  sessions  aforesaid,  both  Houses  agree  in 
making any modification in the rule or both Houses agree that the rule should not be made, the rule shall 
thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that 
any such modification or annulment shall be without prejudice to the validity of anything previously done 
under that rule.] 

50. Power of Central Board to make regulations.—(1) The Central Board may, after consultation 
with the Reserve Bank and with the previous sanction of the Central Government  5[by notification in the 
Official  Gazette]  make  regulations,  not  inconsistent  with  this  Act  and  the  rules  made  thereunder  to 
provide for all matters for which provision is expedient for the purpose of giving effect to the provisions 
of this Act. 

(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may 

provide for— 

(a)  the  nature  of  shares  of  the  State  Bank,  the  manner  in  which  and  the  conditions  subject  to 
which shares may be held and transferred and generally all matters relating to the rights and duties of 
shareholders; 

6[(aa) the procedure for increasing issued capital by the issue of equity or preference shares under 
sub-section (2) and the manner of accepting money for issued capital, forfeiture and re-issue of shares 
under sub-section (5) , of section 5; 

(ab) the manner of nominating an individual by one individual under sub-section (1) , the manner 
of  nominating  an  individual  by  the  joint  holders  under  sub-section  (2),  the  manner  of  varying  or 
cancellation of nomination under sub-section (3), and the manner of nominating a minor under sub-
section (4) , of section 10A;] 

7[(b) the maintenance of register of shareholders, and the particulars to be entered in such register 
in  addition  to  those  specified  in  section  13,  the  safeguards  to  be  observed  in  the  maintenance  of 
register  of  shareholders  on  computer  8  [floppies  or  diskettes  or  any  other  electronic  form],  the 
inspection and closure of the register of shareholders and all other matters connected therewith;] 

(c)  the  holding  and  conduct  of  elections  under  this  Act,  including  the  allocation  of  elected 

directors to the various areas 9[falling within the jurisdiction of each local head office], and the final 

1. Ins. by Act 48 of 1973, s. 18 (w.e.f. 31-12-1973). 
2. The words, brackets and figure “of sub-section (1)” omitted by Act 3 of 1994, s. 19 (w.e.f. 15-10-1993). 
3. Ins. by Act 27 of 2010, s. 31 (w.e.f. 15-9-2010). 
4. Ins. by Act 1 of 1984, s. 47 (w.e.f. 15-2-1984). 
5. Ins. by Act 66 of 1988, s. 17 (w.e.f. 30-12-1988). 
6. Ins. by Act 27 of 2010, s. 32 (w.e.f. 15-9-2010). 
7. Subs. by Act 3 of 1994, s. 20, for clause (b) (w.e.f. 15-10-1993). 
8. Subs. by Act 27 of 2010, s. 32,for “floppies or diskettes” (w.e.f. 15-9-2010). 
9. Subs. by Act 3 of 1994, s. 20, for certain words (w.e.f. 15-10-1993). 

28 

 
 
 
determination  of  doubts  or  disputes  regarding  the  qualifications  of  candidates  for  election  or 
regarding the validity of elections; 

1[(ca) the determination of areas falling within the jurisdiction of each local head office;] 
2  [(d)  the  powers,  functions  and  duties  of  Local  Boards  and  the  restrictions,  conditions  or 
limitations,  if  any,  subject  to  which  they  may  be  exercised  or  performed,  the  formation  and 
constitution of Local Committees (including the number of members of any such Committee) and of 
Committees  of  Local  Boards,  the  powers,  functions  and  duties  of  such  Committees,  the  holding  of 
meetings of Local Committees and Committees of Local Boards and the conduct of business thereat;] 

(e) the fees and allowances which may be paid to directors, or members of Local Boards or Local 
Committees  for  attending  any  meetings  of  the  Central  Board  or  of  its  committees  or  of  the  Local 
Boards  or  Local  Committees,  as  the  case  may  be,  or  for  attending  to  any  other  work  of  the  State 
Bank; 

(f)  the  manner  in  which  the  business  of  the  Central  Board  3  [or  of  Local  Boards]  shall  be 

transacted and the procedure to be followed at the meetings thereof; 

(g) the formation of committees of the Central Board and the delegation of powers and functions 

of the Central Board to such committees and the conduct of business in such committees; 

4* 

* 

* 

* 

* 

(i) the manner in which general meetings shall be convened, the procedure to be followed thereat 

and the manner in which voting rights may be exercised; 

(j) the holding of meetings of shareholders 5*** and the business to be transacted thereat; 

(k) the manner in which notices may be served on behalf of the State Bank upon shareholders or 

other persons; 

(l) the provision of seals for the State Bank and the manner and effect of their use; 

(m) the conduct and defence of legal proceedings and the manner of signing pleadings; 

(n) the duties and conduct of officers, other employees, advisers and agents of the State Bank; 
6[(o) the establishment and maintenance of superannuation pension, provident or other funds for 
the  benefit  of  the  employees  of  the  State  Bank  or  of  the  dependants  of  such  employees  or  for  the 
purposes  of  the  State  Bank,  and  the  granting  of  superannuation  allowances,  annuities  and  pensions 
payable out of any such fund;] 

(p) the form and manner in which contracts binding on the State Bank may be executed; 
7[(q) the terms, conditions, stipulations, restrictions and limitations, if any, in the transaction by 
the State Bank of its businesses in regard to the advancing or lending of money or the discounting or 
purchase  of  any  instrument,  negotiable  or  otherwise,  with  or  without  reference  to  any  security, 
purpose, amount, period or otherwise;] 

(r) the conditions subject to which alone, advances may be made to directors, members of Local 
Boards  or  of  Local  Committees  or  officers  of  the  State  Bank,  or  the  relatives  of  such  directors, 
members or officers or to companies, firms or individuals with which or with whom such directors, 
members, officers, or relatives, are connected as partners, directors, managers, servants, shareholders 
or otherwise; 

(s) the statements, returns, and forms that are required for the purposes of this Act; 

1. Ins. by Act 3 of 1994, s. 20 (w.e.f. 15-10-1993). 
2. Subs. by Act 35 of 1964, s. 16, for clause (d) (w.e.f. 1-12-1964). 
3. Ins. by s. 16, ibid. (w.e.f. 1-12-1964). 
4. Omitted by s. 16, ibid. (w.e.f. 1-12-1964). 
5. The words “on branch registers” omitted by Act 3 of 1994, s. 20 (w.e.f. 15-10-1993). 
6. Subs. by Act 26 of 1959, s. 10, for clause (o) (w.e.f. 28-8-1959). 
7. Subs. by Act 48 of 1973, s. 19, for clause (q) (w.e.f. 31-12-1973). 

29 

 
 
 
(t) the payment of dividends, including interim dividends; 

(u) generally for the conduct of the business of the State Bank. 

1[(2A) All regulations made under this section shall have effect from such earlier or later date as may 

be specified in the regulations.] 

(3)  Notwithstanding  anything  contained  in  this  section,  the  first  regulations  shall  be  made  by  the 
Reserve Bank with the previous sanction of the Central Government, and thereupon shall be deemed to be 
the regulations made by the Central Board under this section and shall have force accordingly until they 
are amended or repealed. 

2[(4) Every regulation shall, as soon as may be after it is made under this Act by the Central Board, be 
forwarded  to  the  Central  Government  and  that  Government  shall  cause  a  copy  of  the  same  to  be  laid 
before each  House  of  Parliament,  while it is in  session,  for a total  period  of thirty  days,  which  may  be 
comprised in one session or in two or more successive sessions, and if, before the expiry of the session 
immediately following the session or the successive sessions aforesaid, both Houses agree in making any 
modification in the regulation or both Houses agree that the regulation should not be made, the regulation 
shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, 
that any such modification or annulment shall be without prejudice to the validity of anything previously 
done under that regulation.] 

3[51. Requirements of foreign law to be complied within certain cases.—If, according to the laws 
of any country outside India, the provisions of this Act by themselves are not effective to transfer to and 
vest in the State Bank any asset or liability which forms part of the undertaking of the Imperial Bank and 
which is situate in that country, the Imperial Bank shall take all such steps as may be required by the laws 
of  that  country  for  the  purpose  of  effecting  or  perfecting  such  transfer  and  vesting,  and  in  connection 
therewith the Imperial Bank may realise any asset and discharge any liability and transfer the net proceeds 
thereof to the State Bank.] 

52. [Amendment of Act 2 of 1934.] Rep. by the Repealing and Amending Act, 1960 (58 of 1960), s. 2 

and the First Schedule (w.e.f. 26-12-1960). 

53. [Amendment of Act 10 of 1949.] Rep. by s. 2 and the First Schedule, ibid.(w.e.f. 26-12-1960) 
4[54. [Amendment of Act 47 of 1920.] Rep. by s. 2 and the First Schedule, ibid. (w.e.f. 26-12-1960).] 

55. No proceeding to lie in India against Imperial Bank after appointed day.—On and from the 
appointed  day,  no  person  shall  make  any  claim  or  demand  or  take  any  proceeding  in  India  against  the 
Imperial Bank or a director, officer or other employee thereof in his capacity as such director, officer or 
employee except in so far as may be necessary for enforcing the provisions of this Act or except in so far 
as it relates to any offence committed by any such director, officer or employee. 

56. References to the Imperial Bank, the Bank of Bengal, etc., in other laws.—On and from the 
appointed day, any reference to the Imperial Bank or to the Bank of Bengal, the Bank of Madras or the 
Bank of Bombay in any law (other than this Act or the Imperial Bank of India Act, 1920 (47 of 1920) or 
in  any  contract  or  other  instrument  shall,  except  as  otherwise  provided  in  any  general  or  special  order 
made by the Central Government, be deemed to be a reference to the State Bank. 

57.  Dissolution  of  Imperial  Bank,  etc.—(1)  On  such  day  as  the  Central  Government  may,  by 
notification in the Official Gazette, specify in this behalf the Imperial Bank shall stand dissolved, and the 
Imperial Bank of India Act, 1920 (47 of 1920), shall stand repealed. 

(2)  On  the  day  specified  in  the  notification  under  sub-section  (1),  the  State  Bank  shall  pay  to  the 

Reserve Bank a sum of ten lakhs of rupees. 

1. Ins. by Act 48 of 1973, s. 19 (w.e.f. 31-12-1973). 
2. Ins. by Act 1 of 1984, s. 48 (w.e.f. 15-2-1984). 
3. Subs. by Act 33 of 1955, s. 5, for section 51 (w.e.f. 1-4-1957). 
4. Ins. by s. 6, ibid. (w.e.f. 1-4-1957). 

30 

 
 
 
 
 
(3)  If,  on  the  day  specified  in  the  notification  under  sub-section  (1),  the  Imperial  Bank  has  in  its 
possession or custody any assets created on or after the appointed day, such assets shall be disposed of in 
accordance with directions issued by the Central Government in this behalf.] 

31 

 
THE FIRST SCHEDULE 

(See section 9) 

COMPENSATION FOR THE TRANSFER OF SHARES OF THE IMPERIAL BANK TO THE RESERVE BANK 

1. In  this  Schedule,  “shareholder”  means  any  person  who  immediately  before  the  appointed  day  is 

registered as the holder of a share in the Imperial Bank. 

2. As compensation for the shares in the capital of the Imperial Bank which, by reason of this Act, are 
transferred to  and  vested in  the  Reserve  Bank,  the  Reserve  Bank  shall pay  to  every  shareholder,  in  the 
manner set out hereinafter, an amount calculated at the rate of one thousand seven hundred and sixty-five 
rupees and ten annas per share in the case of a fully paid-up share and four hundred and thirty-one rupees, 
twelve annas and four pies per share in the case of a partly paid-up share. 

3. Notwithstanding the transfer of the shares in the capital of the Imperial Bank to the Reserve Bank, 
any  shareholder  who  immediately  before  the  appointed  day  is  entitled  to  payment  of  dividend  on  the 
shares of the Imperial Bank held by him shall be entitled to receive from the State Bank— 

(a)  all dividends accruing due on his shares in respect of any half year which ended before the 

appointed day and remaining unpaid; 

(b)  dividends  calculated  at  a  rate  to  be  specified  by  the  Central  Government  in  respect  of  any 
period  immediately  preceding  the  appointed  day  for which  the  Imperial  Bank  has  not  declared  any 
dividend. 
4.  (1)  The  compensation  provided  for  in  this  Schedule  shall  be  given  in  Central  Government 
securities and the form of such securities and the value thereof, computed with reference to their market 
value, shall be such as the Central Government may, by notification in the Official Gazette, specify in this 
behalf: 

Provided  that  where  the  amount  of  such  compensation  is  not  an  exact  multiple  of  the  value  of  the 
Government security as so notified, the amount in excess of the nearest lower multiple of such value shall 
be paid by cheque drawn on the Reserve Bank. 

(2)  Notwithstanding  anything  contained  in  sub-paragraph  (1),  any  person  who  is  registered  as  the 
holder of a share in the Imperial Bank on the 19th day of December, 1954, and continues to be so until the 
appointed day shall, if he applies in writing in this behalf to the Reserve Bank before the expiry of three 
months  from  the  appointed  day,  be  entitled  to  be  paid,  by  cheque  drawn  on  the  Reserve  Bank,  any 
compensation payable to him upto the first ten thousand rupees. 

5.  (1)  Any  shareholder  to  whom  compensation  is  payable  under  this  Schedule  may  apply  to  the 
Reserve Bank before the expiry of three months from the appointed day for the transfer to him of shares 
in the State Bank in lieu of such compensation, and for the purposes of such transfer the value of each 
share of the State Bank shall be such as may be determined by the Reserve Bank in this behalf. 

(2) If on receipt of an application under sub-paragraph (1), the Reserve Bank, in its discretion, decides 
to transfer  any  shares to  the  applicant, it  shall issue  to  the  State  Bank  a  warrant  in  the  prescribed  form 
directing it to transfer in favour of the person specified in the warrant such number of shares as may be 
specified therein out of the shares standing allotted to it under sub-section (1) of section 5, and the State 
Bank shall be bound to comply with such warrant. 

(3) A warrant issued by the Reserve Bank under this paragraph shall not be liable to duty under the 

Indian Stamp Act, 1899 (2 of 1899). 

6. (1) The Reserve Bank may, if it decides to transfer, in pursuance of paragraph 5, more than two 
lakhs, fifty-three thousand and one hundred and twenty-five shares, require the State Bank to issue to it 
such  further  shares  as  may  be  necessary  to  secure  that  it  holds  not  less  than  fifty-five  per  cent.  of  the 
issued capital of the State Bank, and the State Bank shall, without prejudice to the provisions contained in 
sub-section (3) of section 5, comply with such requirement on the Reserve Bank subscribing one hundred 
rupees for each share. 

(2)  No  share  issued  to  the  Reserve  Bank  at  par  under  this  paragraph  shall  carry  dividend  at  a  rate 

higher than four per cent. per annum. 

32 

 
THE SECOND SCHEDULE 

(See section 44) 

DECLARATION OF FIDELITY AND SECRECY 

I ....................................................... do hereby declare that I will faithfully, truly and to the best of  my 
skill  and  ability  execute  and  perform  the  duties  required  of  me  as  director,  member  of  Local  Board, 
member of Local Committee, auditor, adviser, officer or other employee (as the case may be) of the State 
Bank and which properly relate to the office or position in the said State Bank held by me. 

I further declare that I will not communicate or allow to be communicated to any person not legally 
entitled  thereto  any  information  relating  to  the  affairs  of  the  State  Bank  or  to  the  affairs  of  any  person 
having any dealing with the State Bank; nor will I allow any such person to inspect or have access to any 
books or documents belonging to or in the possession of the State Bank and relating to the business of the 
State Bank or to the business of any person having any dealing with the State Bank. 

THE THIRD SCHEDULE.—[Amendments to the Reserve Bank of India Act, 1934.] Rep. by the Repealing 
and Amending Act, 1960 (58 of 1960), s. 2, and the First Schedule (w.e.f. 26-12-1960). 

THE FOURTH SCHEDULE.—[Amendments to the Banking Companies Act, 1949.] Rep. by s. 2 and the 
First Schedule, ibid. (w.e.f. 26-12-1960). 

THE FIFTH SCHEDULE.—[Amendment to the Imperial Bank of India Act, 1920.] Added by the State 
Bank of India (Amendment) Act, 1955 (33 of 1955), by s. 7 (with retrospective effect). 

33 

 
 
 
